In a market for assets, there are two types, AA and BB. Buyers value AA at $5,550 each and value BB at $4,799, while sellers of AA value them at $5,210 and value BB at $4,600. If buyers don't observe type, but believe that fraction 0.65 are type AA, then what is the maximum price the buyers are willing to pay?

In a market for assets, there are two types, AA and BB. Buyers value AA at $5,550 each and value BB at $4,799, while sellers of AA value them at $5,210 and value BB at $4,600. If buyers don't observe type, but believe that fraction 0.65 are type AA, then what is the maximum price the buyers are willing to pay?

Principles of Economics, 7th Edition (MindTap Course List)

7th Edition

ISBN:9781285165875

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter27: The Basic Tools Of Finance

Section: Chapter Questions

Problem 5PA

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