subject
Business, 06.05.2020 05:43 montgomerykarloxc24x

Suppose that there is asymmetric information in the market for used cars. Sellers know the quality of the car that they are selling, but buyers do not. Buyers know that there is a 40% chance of getting a "lemon", a low quality used car. A high quality used car is worth $30,000, and a low quality used car is worth $15,000. Based on this probability, the most that a buyer would be willing to pay for a used car is $ nothing. (Enter your response rounded to the nearest dollar.) Which of the following would best "solve" the asymmetric information problem in this market? A. High-quality sellers could offer warranties or product guarantees. B. Prohibiting the sale of low-quality cars. C. Low-quality sellers could establish industry standards. D. It is not possible to solve the asymmetric information problem in this market.

ansver
Answers: 1

Another question on Business

question
Business, 21.06.2019 22:00
The market yield on spice grills' bonds is 15%, and the firm's marginal tax rate is 33%. what is their shareholders' required return if the equity risk premium is 4%?
Answers: 1
question
Business, 22.06.2019 11:20
Aborrower takes out a 30-year adjustable rate mortgage loan for $200,000 with monthly payments. the first two years of the loan have a "teaser" rate of 4%, after that, the rate can reset with a 5% annual payment cap. on the reset date, the composite rate is 6%. what would the year 3 monthly payment be?
Answers: 3
question
Business, 22.06.2019 11:40
Define the marginal rate of substitution between two goods (x and y). if a consumer’s preferences are given by u(x,y) = x3/4y1/4, compute the consumer’s marginal rate of substitution as a function of x and y. calculate the mrs if the consumer has chosen to consumer 48 units of x and 16 units of y. show your work. (use the back of the page if necessary.
Answers: 3
question
Business, 22.06.2019 16:30
Corrective action must be taken for a project when (a) actual progress to the planned progress shows the progress is ahead of schedule. (b) the technical specifications have been met. (c) the actual cost of the activities is less than the funds received for the work completed. (d) the actual progress is less than the planned progress.
Answers: 2
You know the right answer?
Suppose that there is asymmetric information in the market for used cars. Sellers know the quality o...
Questions
question
Mathematics, 17.11.2019 18:31
question
Mathematics, 17.11.2019 18:31
question
Social Studies, 17.11.2019 18:31
question
Mathematics, 17.11.2019 18:31
Questions on the website: 13722360