Consider two types of used cars and the following information: a) If a buyer can not distinguish the quality of cars of
Posted: Sun May 29, 2022 5:58 pm
Consider two types of used cars and the following
information:
a) If a buyer can not distinguish the quality of cars
offered for sale, and risk neutrality is assumed, which cars will
be offered for sale, and at what price?
(b) Discuss the significance of the example above to financial
intermediaries.
Description Buyer's Value Seller's Value Proportions Peaches $12,000 $10,500 3 Lemons $7,000 $6,000 5
information:
- Consider Two Types Of Used Cars And The Following Information A If A Buyer Can Not Distinguish The Quality Of Cars Of 1 (12.35 KiB) Viewed 18 times
offered for sale, and risk neutrality is assumed, which cars will
be offered for sale, and at what price?
(b) Discuss the significance of the example above to financial
intermediaries.
Description Buyer's Value Seller's Value Proportions Peaches $12,000 $10,500 3 Lemons $7,000 $6,000 5