Question 26
In a market for old cars, there are 200 used cars for sale; half of these cars are good and half of them are lemons (the bad ones). Owners of lemons are willing to sell them for $500. Owners of good used cars are willing to sell them for prices above $1,100 but will keep them if the price is lower than $1,100. There are many potential buyers who are willing to pay $600 for a lemon and $1,700 for a good car. Buyers can’t tell good cars from bad, but original owners know. Based on the above data, answer the given subquestions.
The expected valuation of a car for a potential buyer will be (in $) ______________