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

$150-$600

Explanation:

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.

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