Consumers value high-quality dirt bikes at $6,000 and low-quality dirt bikes at $2,500. The supply of used high-quality dirt bikes is QH = 0.5PH - 2,000; the supply of used low-quality dirt bikes is QL = PL - 1,000. Potential buyers cannot distinguish between the two. If buyers believe that half the used dirt bikes are high quality, what price are buyers willing to pay for a used dirt bike?
A) $3,500
B) $1,250
C) $3,000
D) $4,250
Correct Answer:
Verified
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