Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506725
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Chapter 2, Problem 15CQ
To determine
Meaning of legal ability to exchange.
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In Hayward, there are 100 people who want to sell their used cars. The problem is that nobody
except the original owners know which are which. Owners of lemons will be happy to get rid of
their cars for any price greater than $200. Owners of peaches will be willing to sell them for any
price greater than $1,500 but will keep them if they can't get $1,500. There are a large number of
buyers who would be willing to pay $2,500 for a peach but would pay only $300 for a lemon.
When these buyers are not sure of the quality of the car they buy, they are willing to pay the
expected value of the car, given the knowledge they have.
What is the minimum probability for a used car to be a peach such that peaches stay in the market?
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0.33
0.67
0.55
0.5
Question 19
2.5 points
Save Answer
Prisoner B
Remain Silent
Confess (do not
(cooperate with
other prisoner)
A gets 2 years, B | A gets 8 years, B
gets 2 years
A gets 1 year, B
gets 8 years
cooperate with
other prisoner)
Remain Silent (cooperate
with other prisoner)
Confess (do not cooperate
with other prisoner)
gets 1 year
A gets 5 years, B
gets 5 years
Prisoner A
Two prisoners have the option of confessing or remaining silent. The results of their choices are interdependent. Both are trying to
minimize their time served in prison. These are the potential outcomes. What is the Nash Equilibrium?
Confess, Confess
Confess, Remain Silent
Remain Silent, Remain Silent
Remain Silent, Confess
O O
Imagine you are a buyer in a double oral auction with a reservation value of $13 and there is a seller asking for $7.
If you accept this offer, you will gain $. (Enter your answer as an integer.)
Chapter 2 Solutions
Economics: Private and Public Choice (MindTap Course List)
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