Question: A series of new cars consists of seemingly identical cars which can, however, be divided into 4 c…

01 May Question: A series of new cars consists of seemingly identical cars which can, however, be divided into 4 c…

Posted at 14:32h in 2Past Paper by Exams

A series of new cars consists of seemingly identical cars which can, however, be divided into 4 categories (A, B, C, and D) differing in quality. Each category consists of an equal number of cars. In order to determine the category of a given car it is necessary to possess and use it for a certain time period. Assume 1 year is sufficient in this respect. There are 2 groups of potential buyers (1 and 2) Group 1 is 3 times larger than group 2. Nobody wants to possess more than 1 car. The value of the discussed cars for the two groups of buyers is given in the table below Group 1Group 2 Category A Category B CategoryC Category D 21 18 15 18 17 16 12 Assume that each car is used up after 10 years and that its depreciation is linear. The price of a new car amounts to 16. Who is going to buy a new car? Analyze the situation following the lapse of a year. Assume there are no other cars available, no other buyers exist, and after a year it is only possible to sell the car in one market. (Hint: knowing which consumers have bought a new car, determine which of them will be willing to sell the car they bought and who may be willing to buy a 1-year-old used car).

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