In the market for used cars, suppose there are 5 sellers who are willing to sell at the prices of $1000, $2000, $3000, $4000, and $5000

Economics Dec 08, 2020

In the market for used cars, suppose there are 5 sellers who are willing to sell at the prices of $1000, $2000, $3000, $4000, and $5000. What could the market price be in order to induce three sellers to offer their cars for sale?

Expert Solution

The price must be at least as high as the willingness to sell to induce each seller to sell the car. Thus, to influence three sellers to offer their cars for sale, the price must be at least as high as the willingness to pay for three sellers. At a price of $3,000, there are three sellers who have the willingness to sell lower than or equal to the price and will offer their cars for sale.

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