What would the market price for used cars be

Assignment Help Business Economics
Reference no: EM131379179

There are 1,000 individuals in the city of Lincoln wishing to sell their used cars. The value of a car, V, ranges between $0 and $3000. The distribution of values is such that the number of used cars is worth less than $V is V/3. The true value of the car is known only to the owner. Potential buyers are risk neutral and value a car at its expected value. An owner may choose to have his car inspected for a fee of $300, and will then be able to sell his car for the true value.

(a) Suppose nobody has his car inspected. What would the market price for used cars be?

(b) Now suppose every car worth more than $X gets inspected, whereas every car worth less than $X does not get inspected. What would be the market price of uninspected used cars be, as a function of X?

(c) In equilibrium, the owner of a car worth $X is indifferent between getting an inspection and not getting an inspection. What is the equilibrium value of X?

(d) How many cars will not get inspected? How much will each car sell for?

Reference no: EM131379179

Questions Cloud

The employment at will doctrine did henderson use : Henderson was fired for his refusal to follow orders and for notifying the authorities. In a lawsuit against Wannisky , which legal exception to the employment-at-will doctrine did Henderson use? Explain.
The normal underlying level of unemployment in economy : The normal underlying level of unemployment in the economy is. If the minimum wage is set above the market-determined equilibrium rate, then. How would employment statistics be affected if we were to include people in military? Of the eight categorie..
Identify current industry trend that has significant impact : HSA 525- Identify the current industry trend that has the most significant impact on your chosen organization's financial performance. Indicate the trend's impact on the financial performance of the organization.
Find the standard deviation of the assembly time model : One way the company could solve this problem would be to change the advertising claim. What assembly time should the company quote in order that 60% of customers succeed in finishing the desk by then?
What would the market price for used cars be : There are 1,000 individuals in the city of Lincoln wishing to sell their used cars. The value of a car, V, ranges between $0 and $3000. The distribution of values is such that the number of used cars is worth less than $V is V/3. The true value of th..
Compute what is the present value of the car payments : A car dealership offers you no money down on a new car. If the discount annual rate is 16.04 percent compounded monthly, what is the present value of the car payments?
Can discrimination based on an employees status : Can discrimination based on an employee's status as a single person be considered unlawful under the Civil Rights Act? Explain. Is this a case of disparate impact or disparate treatment? Explain.
Explain why this issue is new or contemporary : Explain why this issue is "new" or contemporary and what aspect of fluid mechanics or applied hydraulics is central to this issue. Keep your search within the area of pressure flow hydraulics.
Describe the distribution of profits for these corporations : Profits. Here is a stem-and-leaf display showing profits as a percent of sales for 29 of the Forbes 500 largest U.S. corporations. The stems are split; each stem represents a span of 5%, from a loss of 9% to a profit of 25%.

Reviews

Write a Review

 

Business Economics Questions & Answers

  Illustrate what is the budget equation

You have an income of $40 to spend on two commodities. Commodity 1 costs $10 per unit, and commodity 2 costs $5 per unit, illustrate what is the budget equation.

  Product you consume for which your marginal utility

Give an example of a product you consume for which your marginal utility increases with the amount of your consumption

  Determine the theoretical optimum level of national defense

In the diagram below, assume that there are two classes of citizens, the "hawks and the "doves," with different preferences for national defense spending. Draw the social marginal benefit curve for society as a whole. Determine the theoretical optimu..

  Can gundersons recover these lost profits as damages

Ptarmigan Investment Company (Ptarmigan), a partnership, entered into a contract with Gundersons, Inc. (Gundersons), a South Dakota corporation in the business of golf course construction. Gundersons sued Ptarmigan and its individual partners to reco..

  Motivated policymakers to raise the fed funds rate

Between January and December 1994, U.S. unemployment fell from 6.7 percent to 5.4 percent of the labor force. The Federal Reserve, the nation's monetary-policymaking authority, took active measures beginning in February 1994 to raise short-term inter..

  Summarize the article tourism investment monitor by tour

In your own words, summarize the article, "Tourism Investment Monitor," by Tourism Research Australia, May 2015. In particular, what are the main messages of the article? Use appropriate diagrams to answer: Do you think increasing investment in Au..

  Deadweight loss-the supply of lettuce in the short run

The supply of lettuce in the short run will be? ________ than the supply in the long run and? ________ than the supply today. Deadweight loss is

  Write report on the supply and demand of coal

B01BECO107 Business Economics Assignment - Report Writing. You are to write a 1500 words report on the supply and demand of coal. The price of coal is determined by supply and demand. The price of coal has dropped to half now compared to its peak pr..

  Consider the demand for ramen noodles

Consider the demand for Ramen noodles. Suppose the price of Ramen noodles decreases. If Ramen noodles are a normal good, this will produce a _____ (choose: positive/negative) substitution effect and a ________ (choose: positive/negative) income effec..

  Disagree with a persuasive opposing stance

State your opinion whether your are Federalist or Anit-federalist whether you agree or disagree with a persuasive opposing stance of your opinion for a newspaper or a political speech to the union address?

  Calculate coefficient price elasticity for goldsboro supply

Calculate the coefficient of price elasticity (midpoints approach) for Goldsboro's supply. Is its supply elastic, or is it inelastic.

  Explain the economics of the taxi medallion system

Explain the economics of the taxi medallion system. This is discussed in the text and in numerous places on the web. Why did cities start the medallion system? Do you think it is a good idea? Explain the economics of the ride-sharing firms such as Ub..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd