Suppose there are many sellers with used cars that they value at amounts ranging from $0 to 15,000$. The distribution is even (or uniform); thus, if you randomly selected all cars worth under $ 6,000, the expected value (for the seller) would be $3,000 (the midpoint from $0 to $6,000). There are many buyers, and they value each car 1,200$ higher than sellers. For example, a car worth $2,000 to a seller would be worth 3, 200$ to a buyer. Find an equilibrium price such that it makes sense for buyers to buy, given what they know about sellers. Under these conditions, the equilibrium price of a used car will be $ enter your response here. (Enter your answer as a whole number.)

Suppose there are many sellers with used cars that they value at amounts ranging from $0 to 15,000$. The distribution is even (or uniform); thus, if you randomly selected all cars worth under $ 6,000, the expected value (for the seller) would be $3,000 (the midpoint from $0 to $6,000). There are many buyers, and they value each car 1,200$ higher than sellers. For example, a car worth $2,000 to a seller would be worth 3, 200$ to a buyer. Find an equilibrium price such that it makes sense for buyers to buy, given what they know about sellers. Under these conditions, the equilibrium price of a used car will be $ enter your response here. (Enter your answer as a whole number.)

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

Chapter17: Making Decisions With Uncertainty

Section: Chapter Questions

Problem 17.1IP

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State whether True/false.