Question: Handwritten solution please with no excel 5. The used car supply in a given town consists of 10,000 cars. The quality of these cars range

Handwritten solution please with no excel

Handwritten solution please with no excel 5. The

5. The used car supply in a given town consists of 10,000 cars. The quality of these cars range from 5,000 to 15,000 with exactly one car being worth each pound amount between these two figures. Used car owners are always willing to sell their cars for what they are worth. Demanders of used cars have no way of telling the quality of a particular car. Their demand depends on the average quality of the cars in the market (Q) and on the price P of the cars themselves, according to the equation: Qd = 1.5Q - P = a) If demanders base their estimate of Q on the entire used car market, what will its value be and what will be the equilibrium price of used cars? b) In the equilibrium described in part a, what will be the average quality of used cars actually traded in the market? c) If demanders revise their estimate of Q on the basis of the average quality of cars actually traded, what will be the new equilibrium price of used cars? What is the average quality of cars traded now? d) Is there a market equilibrium in this situation at which the actual value of Q is consistent with supply and demand equilibrium at a positive price and quantity

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