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Question 16

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Use the following information for questions
There are three types of cars, the good G, the bad B, and the ugly U.A G car is worth $40, a B car is worth $20, and a U car is worth $15.The seller knows the precise quality of his car, but the buyer cannot distinguish the difference in the quality of a car offered for sale.There is an equal probability of a car being G, B, or U.
-A possible warranty scheme that can ensure incentive compatibility in question 20 is $g, $b, $u


A) $50, $45, $5
B) $45, $15, $0
C) $45, $35, $0
D) $50, $5, $0
E) $25, $12.5, $0

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