I'm not a bike expert so I'm not sure if I'm using the proper terminology here. So I bought a used city bike. It's the first time I see such gear and such a bike actually. It looks almost like this bike: http://www.fahrrad.de/kreidler-vp2-schwarz-glanz-385180.html
However there is only a single issue with the bike. The speed switcher only changes from speed 1 to speed 2. I can't change to higher speeds and I don't know what the problem is. When I try to switch to 3 for example the switcher doesn't allow me to, so maximum is speed 2. I went to a bike shop, the guy seemed to be not knowledgeable at all. He said the problem could be from the switcher itself and it would cost 10 Euros to replace it, but it could also be the entire gear is broken and that would cost 200 euros!!! It felt that he wanted to ripe me so he wasn't really willing to tell me what the real problem is.
My question is: how to find out which part is broken?
Here are the images for the switcher and the gear itself. And I would highly appreciate it if someone knew what the issue might be so he can also mention the name of the broken part so I can order it online!