If the consumers are risk neutral

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The price of a new iTab computer is $500. It is known that a fraction d of the iTabs are defective. All consumers value the non-defective computers at $550 each. The same model of second-hand iTab can be found on eBay for $50, which includes shipping costs.

(a) Do you expect to find non-defective iTabs for sale on eBay? Why or why not?

(b) If the consumers are risk neutral, what is d?

Reference no: EM13977080

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