Prices of industrial products and wages tend to be the most "flexible."

Suppose that there are two types of cars, good and bad. The qualities of cars are not observable but are known to the sellers. Risk-neutral buyers and sellers have their own valuation of these two types of cars as follows:  Types of CarsBuyer's ValuationSeller's ValuationGood (50% probability)5,0004,500Bad (50% probability)3,0002,500Now suppose that sellers value a good car at $4,500 and a bad car at $2,500, and quality is not observed by the buyers. What is the highest price that risk-neutral buyers will offer for a used car if they recognize adverse selection?

A. $4,000 B. $3,000 C. $4,500 D. $2,500

Marginal costs will begin to rise at the point where

A. fixed costs increase. B. variable costs increase. C. diminishing marginal product begins. D. average variable costs increase.