Suppose Buyers in the Used Car Market Are Willing to Pay

Multiple Choice

Suppose buyers in the used car market are willing to pay $8,000 for a plum (high-quality) used car and $3,000 for a lemon (low-quality) used car. If buyers believe that 20% of the used cars on the market are lemons (low quality) , what would they be willing to pay for a used car?

A) $7,000
B) $6,000
C) $5,000
D) $4,000