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Business, 30.03.2020 19:38 alanflores40
Suppose that there are two types of houses for sale: those with solid foundations and those with cracked foundations. In all other respects, the two types of houses are identical. Houses with solid foundations are worth $200,000, while those with cracked foundations are worth $200,000 minus the $20,000 to fix the crack, or $180,000. Sellers know which type of house they have, but buyers cannot detect whether the foundation has a crack. Suppose that 80 percent of the houses for sale have a solid foundation and 20 percent of the houses for sale have a cracked foundation. In the long run, we would expect Multiple Choice a. 80 percent of the houses for sale to have a solid foundation, 20 percent to have a cracked foundation, and houses to sell for $196,000 b. 100 percent of the houses for sale to have a cracked foundation and to sell for $180,000 c. 100 percent of the houses for sale to have a solid foundation and to sell for $200,.000 d. 100 percent of the houses for sale to have a cracked foundation and to sell for more than $180.000.
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Suppose that there are two types of houses for sale: those with solid foundations and those with cra...
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