Figure 9.4
-Figure 9.4 represents the market for used 12 megapixel digital cameras. Suppose buyers are willing to pay $400 for a plum high-quality)used digital camera and $200 for a lemon low-quality)used digital camera. If buyers believe that 50% of used digital cameras in the market are lemons low quality), how many plums will be supplied by sellers?

Question

Quizplus · Accepted Answer

The correct answer is A.If buyers believe that 50% of used digital cameras in the market are lemons (low quality), then the expected value of a used digital camera to a buyer is $300 ((0.5 * $400) + (0.5 * $200)). At this price, sellers will supply 50 plums (high-quality used digital cameras).

Figure 9.4 -Figure 9.4 Represents the Market for Used 12 Megapixel Digital