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, while the supply of used low-quality dirt bikes is Q₁ = P₁ - 1,000. Potential buyers cannot distinguish between the two. Buyers base their willingness to pay on the belief that half the used dirt bikes are high quality. At the buyers' willingness to pay, sellers will offer high-quality bikes and low-quality ones. O2,000; 2,000 O 3,000; 1,500 125; 3,250 450; 900

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, while the supply of used low-quality dirt bikes is Q₁ = P₁ - 1,000. Potential buyers cannot distinguish between the two. Buyers base their willingness to pay on the belief that half the used dirt bikes are high quality. At the buyers' willingness to pay, sellers will offer high-quality bikes and low-quality ones. O2,000; 2,000 O 3,000; 1,500 125; 3,250 450; 900

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter6: Simple Pricing

Section: Chapter Questions

Problem 6.1IP

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