1. Individual Problems 21-1 When real estate agents sell their own, rather than clients', houses, they leave the houses on the market for a longer time (10 days longer on average) and wind up with better prices. Suppose that real estate agents earn a commission equal to 3% of the sale value of each house that they help sell. Suppose a real estate agent ha an offer on a house of $100,000. The agent can get a 4% higher offer with more effort and by leaving the house on the market for a few more weer If the agent sells the house now, she will earn a commission of s sell the house, the agent can earn a commission of s the house on the market. Thus, the agent gains s By keeping the house on the market and expending more effort for the extra effort and time of keep Suppose a real estate agent has an offer on a house that she owns. The agent has a current offer of $100,000, but can get a 4% higher offer with more effort and by leaving the house on the market for a few more weeks. Assume that all of the commission is paid back to the agent, since she will act as the agent for the sale. If the agent waits to sell the house, she gains s more than selling the house now. Since this amount is than what she would gai likely to keep a house on the market and expend by waiting to sell a house she does not own (as in the first part of the problem), the agent is more effort to sell a house that she owns, as opposed to one that she does not own.
1. Individual Problems 21-1 When real estate agents sell their own, rather than clients', houses, they leave the houses on the market for a longer time (10 days longer on average) and wind up with better prices. Suppose that real estate agents earn a commission equal to 3% of the sale value of each house that they help sell. Suppose a real estate agent ha an offer on a house of $100,000. The agent can get a 4% higher offer with more effort and by leaving the house on the market for a few more weer If the agent sells the house now, she will earn a commission of s sell the house, the agent can earn a commission of s the house on the market. Thus, the agent gains s By keeping the house on the market and expending more effort for the extra effort and time of keep Suppose a real estate agent has an offer on a house that she owns. The agent has a current offer of $100,000, but can get a 4% higher offer with more effort and by leaving the house on the market for a few more weeks. Assume that all of the commission is paid back to the agent, since she will act as the agent for the sale. If the agent waits to sell the house, she gains s more than selling the house now. Since this amount is than what she would gai likely to keep a house on the market and expend by waiting to sell a house she does not own (as in the first part of the problem), the agent is more effort to sell a house that she owns, as opposed to one that she does not own.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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The options for the drop-down are both: less or moreThe options for the drop-down are both: less or more
Transcribed Image Text:1. Individual Problems 21-1
When real estate agents sell their own, rather than clients', houses, they leave the houses on the market for a longer time (10 days longer on
average) and wind up with better prices.
Suppose that real estate agents earn a commission equal to 3% of the sale value of each house that they help sell. Suppose a real estate agent ha
an offer on a house of $100,000. The agent can get a 4% higher offer with more effort and by leaving the house on the market for a few more weer
If the agent sells the house now, she will earn a commission of s
sell the house, the agent can earn a commission of s
the house on the market.
Thus, the agent gains s
By keeping the house on the market and expending more effort
for the extra effort and time of keep
Suppose a real estate agent has an offer on a house that she owns. The agent has a current offer of $100,000, but can get a 4% higher offer with
more effort and by leaving the house on the market for a few more weeks. Assume that all of the commission is paid back to the agent, since she will
act as the agent for the sale.
If the agent waits to sell the house, she gains s
more than selling the house now. Since this amount is
than what she would gai
likely to keep a house on the market and expend
by waiting to sell a house she does not own (as in the first part of the problem), the agent is
more effort to sell a house that she owns, as opposed to one that she does not own.
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