Question

a. Suppose that there are equal numbers of good and bad used cars in the market and that good used cars are worth $13,000 while bad used cars are worth $5,000. What is the average value of a used car?

Answer 1

The average value of a used car is $9000.

Step-by-step explanation:

Because there are equal numbers of good and bad used cars in the market, the likelihood of both the type is 0.50:

The average value of a used car equals

= 0.5*$13,000 + 0.5*$5,000

= $9000

Therefore, The average value of a used car is $9000.