The price of a new iTab computer is $500. It is known that a fraction d of the iTabs are defective. All consumers value the non-defective computers at $550 each. The same model of second-hand iTab can be found on eBay for $50, which includes shipping costs.
(a) Do you expect to find non-defective iTabs for sale on eBay? Why or why not?
(b) If the consumers are risk neutral, what is d?