Solved

Two Types of Existing Houses Are for Sale: Ones with a Cracked

Question 88

Multiple Choice

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:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Unlock this Answer For Free Now!

View this answer and more for free by performing one of the following actions

qr-code

Scan the QR code to install the App and get 2 free unlocks

upload documents

Unlock quizzes for free by uploading documents