Google Answers Logo
View Question
 
Q: economics ( No Answer,   1 Comment )
Question  
Subject: economics
Category: Business and Money > Economics
Asked by: navidhs-ga
List Price: $20.00
Posted: 17 Apr 2006 10:09 PDT
Expires: 19 Apr 2006 13:46 PDT
Question ID: 719807
Suppose that products differ in their intrinsic quality, Q.  Q is
distributed uniformly between 0 and 1.  Sellers observe Q but buyers
only observe Q after they have purchased and used the product for some
time.  Sellers value products of quality Q at $150 + $200Q.  Buyers
will eventually value the product at $200 + $200Q.  What quality
products will be sold?
Answer  
There is no answer at this time.

Comments  
Subject: Re: economics
From: jack_of_few_trades-ga on 17 Apr 2006 11:09 PDT
 
Ah homework.

I think you might have to make an assumption that buyers assume Q = .5
(since this is the average Q) before they purchase the item.  I'm not
certain that is the approach to take, but it makes sense to me.  I'm
sure you can do the math from there.

Important Disclaimer: Answers and comments provided on Google Answers are general information, and are not intended to substitute for informed professional medical, psychiatric, psychological, tax, legal, investment, accounting, or other professional advice. Google does not endorse, and expressly disclaims liability for any product, manufacturer, distributor, service or service provider mentioned or any opinion expressed in answers or comments. Please read carefully the Google Answers Terms of Service.

If you feel that you have found inappropriate content, please let us know by emailing us at answers-support@google.com with the question ID listed above. Thank you.
Search Google Answers for
Google Answers  


Google Home - Answers FAQ - Terms of Service - Privacy Policy