(i) Jim has a used car that is worth between 0 and 2000 pounds (an equal chance of each price in between). Doug is thinking of buying the car and knows it is worth 35% more to him than to Jim. Doug can make a take-it-or-leave-it offer to Jim. How much should Doug offer Jim? Answer:

(i) Jim has a used car that is worth between 0 and 2000 pounds (an equal chance of each price in between). Doug is thinking of buying the car and knows it is worth 35% more to him than to Jim. Doug can make a take-it-or-leave-it offer to Jim. How much should Doug offer Jim? Answer:

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter1: The Art And Science Of Economic Analysis

Section: Chapter Questions

Problem 2.5P

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(i) Jim has a used car that is worth between 0 and 2000 pounds (an equal chance of each price in between). Doug is thinking of buying
the car and knows it is worth 35% more to him than to Jim. Doug can make a take-it-or-leave-it offer to Jim. How much should Doug
offer Jim?
Answer:

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