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Suppose that, good used cars are worth $12,000 and lemon used cars are worth $ 7,000 to their owners. If X = 30%, how much a riskneutral consumer would be willing to pay for a used car? Answer Sel... ected Answer: $8,500 Correct Answer: $10,500 • Question 8 0 out of 1 points Two types of existing houses are for sale: ones with a cracked foundation and ones without. In all other respects, they are identical. Houses without cracked foundations are worth $200,000 while those with cracked foundations are worth $200,000 minus the $20,000 to fix the crack or $180,000. The frequency of solid foundations is 80%. Sellers know which type of house they have but buyers cannot detect a crack. No seller "must" sell his house in order to move and thus no one accepts anything less than its value. [Show More]
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