In 1923 during Prohibition, the market for 60 day fermented grape juice was legal, even though...

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Economics

In 1923 during Prohibition, the market for 60 day fermentedgrape juice was legal, even though it often had up to 12% alcoholcontent. For buyers, a high quality bottle of juice was worth$6.65, while a low quality one was only worth $3.33. Sellers valuedgood bottles at $4.99 and bad ones at $1.96. If an uninformed buyerwas willing to pay a price of exactly $4.99 for a bottle of juice,then what was the fraction of good ones?
Group of answer choices
0.35
0.50
0.55
0.65
Consider the 1923 market for grape juice one more time, but nowassume that uninformed buyers figured 72% of the juice was good andthe rest was bad. At the resulting market price, seller surplusfrom selling good juice is and seller surplus from bad juiceis _.Â Â
Group of answer choices
$0.73; $3.76
$0.73; $2.11
$1.35; $3.76
$1.35; $2.11

Answer & Explanation Solved by verified expert

3.6 Ratings (477 Votes)

a Let the buyers assume that fraction x of bottles were good and the rest were bad Value of good bottles to buyers 665 Value of bad bottles bottles to buyers 333 So See Answer

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