John is looking to sell his car and Mary is looking to buy it. John values the car at $2000 and Mary values it at $3000. John places an add in the newspaper and Mary must either accept the offer or ignore it. Which of the following prices would be the best price for John to advertise the car for?Group of answer choices$2000John is indifferent between any of these prices.$2999$3500$2500
Question
John is looking to sell his car and Mary is looking to buy it. John values the car at 3000. John places an add in the newspaper and Mary must either accept the offer or ignore it. Which of the following prices would be the best price for John to advertise the car for?Group of answer choices29992500
Solution
The best price for John to advertise the car for would be $2999. Here's why:
- John values the car at $2000, so any price above this would be a gain for him.
- Mary values the car at $3000, so she would be willing to pay any price up to this amount.
- If John advertises the car for $2999, he is maximizing his potential gain while still keeping the price within what Mary is willing to pay.
- If he advertises for 2000 or 2999 is the best price for John to advertise the car for.
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