Suppose that in New Crankshaft, Pennsylvania, the quality distribution of the 4,000 used cars on the market is such that the number of used cars of value less than V is . Original owners must sell their used cars. Original owners know what their cars are worth, but buyers can't determine a car's quality until they buy it. An owner can either take his car to an appraiser and pay the appraiser $100 to appraise the car (accurately and credibly) or sell the car unappraised. In equilibrium, car owners will have their cars appraised if and only if the car's value is at least

Question

Suppose that in New Crankshaft, Pennsylvania, the quality distribution of the 4,000 used cars on the market is such that the number of used cars of value less than V is  . Original owners must sell their used cars. Original owners know what their cars are worth, but buyers can't determine a car's quality until they buy it. An owner can either take his car to an appraiser and pay the appraiser $100 to appraise the car (accurately and credibly) or sell the car unappraised. In equilibrium, car owners will have their cars appraised if and only if the car's value is at least

Quizplus · Accepted Answer

If the value of a car is less than $200, it is not worth it for the owner to pay $100 to have it appraised. Therefore, owners of low-quality cars will always sell their cars unappraised. 
If the value of a car is at least $200, it may be worth it for the owner to pay $100 to have it appraised, as they may be able to sell the car for a higher price if the appraisal reveals a higher quality than buyers otherwise would assume. Therefore, owners of high-quality cars will have their cars appraised. 
Thus, the equilibrium point would be at a value of $200. Any value lower than $200, owners will sell unappraised, and any value higher than $200, owners will have their cars appraised.

Suppose That in New Crankshaft, Pennsylvania, the Quality Distribution of the 4,000