You are in the market for a used 2006 Honda Accord. You know that half of the 20

Question

You are in the market for a used 2006 Honda Accord. You know that half of the 2006 Accords are lemons and half are peaches. If you could be assured that the Accord you were buying were a peach, you would be willing to pay up to $10,000. On the other hand, you would only be willing to pay $2,000 for a lemon. You have no ability to discern whether any particular Accord is a lemon or a peach. Sellers of Accords, on the other hand, are likely to know whether their particular car is a lemon or a peach. Suppose sellers of lemons will sell their cars for $1,500 or more and peach sellers will be willing to sell their cars for $8,500 or more You are willing to offer for a car of unknown quality and are willing to sell you their car. 0 A. $2,000; lemon owners only 0 B. $5,000; lemon owners only ° C. $6,000; lemon owners only 0 D. $8,500, both lemon and peach owners

Explanation / Answer

Ans is A

I know in 2000 only lemom car will be sold out and Ill also be willing to pay 2000

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