In the market for used cars, half of the cars are of good quality and would sell for $14,000, while half of the cars are of poor quality and would sell for $10,000. If a buyer possessed no information about the quality of the car she was considering, what is the expected value of the car? What would the buyer be willing to pay for the car? If the expected value and the willingness to pay are different, explain why.

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The Answer of In the market for used cars, half of the cars are of good quality and would sell for $14,000, while half of the cars are of poor quality and would sell for $10,000. If a buyer possessed no information about the quality of the car she was considering, what is the expected value of the car? What would the buyer be willing to pay for the car? If the expected value and the willingness to pay are different, explain why.

In the Market for Used Cars, Half of the Cars