The manager of a Pittsburgh shop wishes to sell on eBay a used telescope that is in good condition, The manager knows that prospective buyers perceive a 50-50 chance that the telescope is in good condition. If it is, buyers are willing to pay $1,030, but if it is in poor condition, they will pay only $340. What is the average amount a buyer will be willing to pay? Is there a lemons problem? Explain. The average amount that a prospective buyer will be willing to pay is $ (Enter your response as a whole number.) Since the value ofa used telescope that is in OA poor condition is less than the average amount that a prospective buyer will be willing to pay, there is a lomons problem because only people with telescopes in good condition will be willing to try to sell them on eBay. OB. poor condition is less than the average amount that a prospective buyer will be willing to pay, there is not a lemons problem because only people with telescopes in good condition will be willing to try to sell them on eBay. OC. good condition exceeds the average amount that a prospective buyer will be willing to pay, there is not a lemons problem because only people with telescopes in poor condition will be willing to try to sell them on eBay. OD. good condition exceeds the average amount that d prospective buyer will be willing to pay, there is a lemons problem because only people with telescopes in poor condition will be willing to try to sell them on eBay.
The manager of a Pittsburgh shop wishes to sell on eBay a used telescope that is in good condition, The manager knows that prospective buyers perceive a 50-50 chance that the telescope is in good condition. If it is, buyers are willing to pay $1,030, but if it is in poor condition, they will pay only $340. What is the average amount a buyer will be willing to pay? Is there a lemons problem? Explain. The average amount that a prospective buyer will be willing to pay is $ (Enter your response as a whole number.) Since the value ofa used telescope that is in OA poor condition is less than the average amount that a prospective buyer will be willing to pay, there is a lomons problem because only people with telescopes in good condition will be willing to try to sell them on eBay. OB. poor condition is less than the average amount that a prospective buyer will be willing to pay, there is not a lemons problem because only people with telescopes in good condition will be willing to try to sell them on eBay. OC. good condition exceeds the average amount that a prospective buyer will be willing to pay, there is not a lemons problem because only people with telescopes in poor condition will be willing to try to sell them on eBay. OD. good condition exceeds the average amount that d prospective buyer will be willing to pay, there is a lemons problem because only people with telescopes in poor condition will be willing to try to sell them on eBay.
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
Chapter18: Auctions
Section: Chapter Questions
Problem 18.2IP
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Transcribed Image Text:The manager of a Pittsburgh shop wishes to sell on eBay a used telescope that is in good condition. The manager knows that prospective buyers perceive a 50-50
chance that the telescope is in good condition. If it is, buyers are willing to pay $1,030, but if it is in poor condition, they will pay only $340. What is the average amount
a buyer will be willing to pay? Is there a lemons problem? Explain.
The average amount that a prospective buyer will be willing to pay is $. (Enter your response as a whole number)
Since the value of a used telescope that is in
OA poor condition is less than the average amount that a prospective buyer will be willing to pay, there is a lemons problem because only people with
telescopes in good condition will be willing to try to sell them on eBay.
O B.
poor condition is less than the average amount that a prospective buyer will be willing to pay, there is not a lemons problem because only people with
telescopes in good condition will be willing to try to sell them on eBay.
OC. good condition exceeds the average amount that a prospective buyer will be willing to pay, there is not a lemons problem because only people with
telescopes in poor condition will be willing to try to sell them on eBay.
O D. good condition exceeds the average amount that dprospective buyer will be willing to pay, there is a lemons problem because only people with
telescopes in poor condition will be willing to try to sell them on eBay.
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