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13 April, 07:03

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?

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  1. 13 April, 07:11
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    The average value of a used car is $9000.

    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.
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