Each consumer is risk neutral and values a non defective


It is known that some fraction d of all new cars are defective. Defective cars cannot be identified as such except by those who own them. Each consumer is risk neutral and values a non defective car at $16,000. New cars sell for $14,000 each, and used ones for $2,000. If cars do not depreciate physically with use, what is the proportion d of defective new cars?

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Econometrics: Each consumer is risk neutral and values a non defective
Reference No:- TGS01586496

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