You are in the market for a used car. Suppose that the value of a low quality used car is $5,000 and the value of a high quality car is $12,000. Suppose that you cannot distinguish with certainty the quality of the used car but you have 65% information based on the Carfax that the used car you were willing to buy is of high quality. How much are you willing to pay for the used car?
a. $5,000
b. $7750
c. $12,500
d. $9875