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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? |
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There is no answer at this time. |
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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. |
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