Buyers are willing to purchase original paintings for $1000, and indistinguishable first-copies for $200. Sellers are willing to sell original paintings for $900 and first-copies for $150. Buyers believe that 50% of the paintings in the market are first copies. Buyers cannot distinguish between original paintings and first-copies, but sellers know with absolute certainty whether the art that they own is an original or a first copy.

For what price range will a market exist for both original and first-copy paintings? explain

Based on the information given what will be the PRICE RANGE for both the original paintings and the first-copy paintings will be between the range of $150-$600 reason been that we were told that the SELLERS are ready to sell the original paintings for the amount of $900 while the first-copies will go for the amount of $150 which is the lowest price range, which means that if the Buyers believed that 50% of the paintings in the market will be first copies the highest price range of the paintings will be $600 Calculated as:[(50%*$900)+$150)]

=$450+$150

=$600

Therefore the PRICE RANGE for both the original paintings and the first-copy paintings will be between the PRICE RANGE of $150-$600.

anthougo anthougo · Answer 2 · 2021-12-21T09:13:41+01:00

The price range for both original and first-copy paintings would be between $175 and $950.

This price range is based on an expected average computed based on the imperfect information available to buyers in this market.

Data and Calculations:

The Expected average price for first-copies = $175 {($200 x 50%) + ($150 x 50%)}.

The Expected average price for original paintings = $950 ($1,000 x 50%) + ($900 x 50%)}.

Thus, given the imperfect information available to buyers in this market, the price range would be between $175 and $950.

Learn more about imperfect market information here: https://brainly.com/question/21650394