Suppose in the Market for Used Cars, Buyers Would Be

Multiple Choice

Suppose in the market for used cars, buyers would be willing to pay $9,000 for a car in good condition, while buyers would have to incur a cost of $3,500 to repair a car in poor condition.If the probability of a car being in bad condition is 0.35, what price would a risk-neutral buyer be willing to pay?

A) $3,925
B) $1,925
C) $7,775
D) $5,850