Suppose that 85% of sellers have low-quality cars. assume buyers know that 85% of sellers have low-quality cars but are unable to determine the quality of individual cars.

Expected value of car is the sum of the probability of getting a low-Q car multiplied by the value of a low-Q car and the probability of getting a high-Q car multiplied by the value of a high-Q car.

= = (chance of HQ car * $9,500) +

(chance of LQ car * $5,500)

= = (0.15 * $9,500) + (0.85 * $5,500)

= = $ 6,100