Business, 23.07.2019 03:10 berankworthy7153

Suppose that everyone in a used-car example is risk neutral, potential car buyers value lemons at $1 comma 000 and good used cars at $2 comma 200, the reservation price of lemon owners is $500, and the reservation price of owners of high-quality used cars is $1 comma 500. the share of current owners who have lemons is theta. for what values of theta do all the potential sellers sell their used cars? describe the equilibrium. the most a risk-neutral buyer would be willing to pay for a car of unknown quality as a function of theta is pequals nothing. (properly format your expression using the tools in the palette.)

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Suppose that everyone in a used-car example is risk neutral, potential car buyers value lemons at $1...

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