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The Supply of Used High-Quality Motorcycles Is QH = 0

Question 60

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The supply of used high-quality motorcycles is QH = 0.2PH - 1,000, and the supply of used low-quality motorcycles is QL = 0.5PL - 1,000. In the used-motorcycle market, potential buyers cannot tell them apart. The supply of used high-quality motorcycles is Q<sub>H</sub> = 0.2P<sub>H</sub> - 1,000, and the supply of used low-quality motorcycles is Q<sub>L</sub> = 0.5P<sub>L</sub> - 1,000. In the used-motorcycle market, potential buyers cannot tell them apart.

Correct Answer:

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a. Expected value = (0.5 × 10,000) + (0....

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