Suppose Buyers in the Used Car Market Are Willing to Pay

Multiple Choice

Suppose buyers in the used car market are willing to pay $5,000 for a plum (high-quality) used car and $2,500 for a lemon (low-quality) used car. If buyers believe that 50% of the used cars on the market are lemons (low quality) , what would they be willing to pay for a used car?

A) $2500
B) $3000
C) $3750
D) $5000