Question: Question text Bay Center Implement, Co., the long-time sole dealer of farm machinery in Bay City, sells only unreliable tractors that frequently break down.Having found

Question text

Bay Center Implement, Co., the long-time sole dealer of farm machinery in Bay City, sells only "unreliable" tractors that frequently break down.Having found a way of successfully selling high quality cars, Peter's Car Sales has just entered the machinery market to sell only "reliable" used tractors.The value of each of these kinds of tractors to a farmer and the wholesale cost of obtaining them are as follows:

In the absence of any quality signals, predict the long-run equilibrium values of each of the following items:

What will be Peter's profit per tractor?

Car Type Value to Farmer Wholesale Cost

Reliable $100,000 $70,000

Unreliable $60,000 $40,000

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