Andrew wants to purchase Adam's car. Andrew is prepared to pay a maximum of $2,000. Adam is not willing to accept anything lower than $1,000. Suppose that any failure to reach an agreement reduces Andrew's and Adam's gain from reaching an agreement by 10 percent and 5 percent, respectively. If there is no limit to the number of negotiating rounds, what price should Andrew offer Adam in the first round?
A) An amount around $1,110.
B) An amount around $1,330.
C) An amount around $1,530.
D) An amount around $1,690.
E) An amount around $1,770.

Question

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The Answer of Andrew wants to purchase Adam's car. Andrew is prepared to pay a maximum of $2,000. Adam is not willing to accept anything lower than $1,000. Suppose that any failure to reach an agreement reduces Andrew's and Adam's gain from reaching an agreement by 10 percent and 5 percent, respectively. If there is no limit to the number of negotiating rounds, what price should Andrew offer Adam in the first round?
A) An amount around $1,110.
B) An amount around $1,330.
C) An amount around $1,530.
D) An amount around $1,690.
E) An amount around $1,770.

Andrew Wants to Purchase Adam's Car