Answer
\$2400
Work Step by Step
Gain = price charged - equilibrium price in a thin market
The car is high quality, so the buyer will keep it, not return it.
The seller receives \$5,000 and keeps it — no refund or extra payment.
Without the guarantee, in the thin market, the seller could have sold it for $\2,600.
So, by offering the guarantee, the seller earns:
\$5,000−\$2,600=\$2,400
Answer (b): \$2,400
