5 p and the maximum price buyers are willingtopayis

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: ality cars will be sold as long as p ≥ 4000 D. the market will clear E. Abstain 13. If information about car quality is asymmetric: [Pen. 0.5] A. the market will clear at an equilibrium price of R7500. B. bad quality second hand cars will be sold since buyers are willing to pay R2000 ≤ p ≤ R7500 C. good quality second hand cars will be sold since buyers are willing to pay R 7500 ≤ p ≤ R8000 D. good quality second hand cars will be sold since buyers are willing to pay p > R 5000 E. Abstain 14. Now Assume that car quality is uniformly distributed over the price interval [0,p]. Then, for a given market price p, [Pen. 1] A. average quality of cars will be p and the maximum price buyers are willing to pay is 0.5 p B. average quality of cars will be p and the minimum price buyers are willing to pay is 0.5 p C. average quality of cars will be 0.5 p and the minimum price buyers are willing to pay is 0.75 p D. average quality of cars will be 0.5 p and the maximum price buyers are willing to pay is 0.75 p E. Abstain 9 15. In equilibrium, when this market is characterised by asymmetric information, and car...
View Full Document

{[ snackBarMessage ]}

Ask a homework question - tutors are online