Two types of existing houses are for sale: ones with a cracked foundation and ones without.In all other respects,they are identical.Houses without cracked foundations are worth $200,000;those with cracked foundations are worth $200,000 minus the $20,000 to fix the crack,or $180,000.The frequency of solid foundations is 80%.Sellers know which type of house they have,but buyers cannot detect a crack.No seller must sell his house in order to move,and thus no one accepts anything less than the value of their house.
-Refer to the information above.Owners of houses with solid foundations will find that
A) buyers are offering more than $200,000.
B) buyers are offering exactly $200,000.
C) buyers are offering exactly $180,000.
D) it is not worth it to sell their house.
E) some buyers offer $200,000 and some offer $180,000.
Correct Answer:
Verified
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