1. Jack is considering selling his elliptical machine, which he never really used, is high quality, and has been taking up space in his spare bedroom. He lists it on Facebook Marketplace for "$1,200 or best offer" but in reality won't sell it for less than $1,000. Lina is looking to purchase a used elliptical machine. For a high-quality elliptical, she is willing to pay up to $1,300, and for a low-quality elliptical, she is willing to pay $600. Lina is risk neutral but she cannot tell if the elliptical machine is high quality or low quality. If she believes that 60% of used elliptical machines are high quality and 40% are low quality, what is the maximum price that Lina would be willing to pay? Would Jack agree to this price?

1. Jack is considering selling his elliptical machine, which he never really used, is high quality, and has been taking up space in his spare bedroom. He lists it on Facebook Marketplace for "$1,200 or best offer" but in reality won't sell it for less than $1,000. Lina is looking to purchase a used elliptical machine. For a high-quality elliptical, she is willing to pay up to $1,300, and for a low-quality elliptical, she is willing to pay $600. Lina is risk neutral but she cannot tell if the elliptical machine is high quality or low quality. If she believes that 60% of used elliptical machines are high quality and 40% are low quality, what is the maximum price that Lina would be willing to pay? Would Jack agree to this price?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter6: Consumer Choices

Section: Chapter Questions

Problem 1SCQ: Jeremy is deeply in love with Jasmine. Jasmine lives where cell phone coverage is poor, so he can...

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Answer both please otherwise I will give dounvote
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