Suppose Buyers in the Used Car Market Are Willing to Pay

Multiple Choice

Suppose buyers in the used car market are willing to pay $3,500 for a plum (high-quality) used car and $1,500 for a lemon (low-quality) used car. If buyers believe that 30% of the used cars on the market are lemons (low quality) , what would they be willing to pay for a used car?

A) $2,000
B) $2,500
C) $2,900
D) $3,500