12 We assume again the original assumptions of the Akerlof model, but now alter the information assumptions in this exercise. Now assume that neither buyers nor sellers have information about specific car quality, although each group knows the distribution of X, as before. a Assume that there is a market equilibrium price of P = 80. What set of cars will be to non offered in this market? In other words, what is $2(80) under these assumptions? tebuchbDoes adverse selection occur in this situation? c Derive a more general expression for 2(P). For any given P, what is the set of cars that will be offered? d What is the range of P for which at least some cars will be offered and at least some cars will be purchased? Remember that sales do happen when buyers and sellers are indifferent.

12 We assume again the original assumptions of the Akerlof model, but now alter the information assumptions in this exercise. Now assume that neither buyers nor sellers have information about specific car quality, although each group knows the distribution of X, as before. a Assume that there is a market equilibrium price of P = 80. What set of cars will be to non offered in this market? In other words, what is $2(80) under these assumptions? tebuchbDoes adverse selection occur in this situation? c Derive a more general expression for 2(P). For any given P, what is the set of cars that will be offered? d What is the range of P for which at least some cars will be offered and at least some cars will be purchased? Remember that sales do happen when buyers and sellers are indifferent.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

4)Refer to the diagram below. Based on the information on the graphs, we conclude that a)The values of the slopes of the lines are different, but the behavior of buyers in both the diagrams are identical b)The values of the slopes of the lines are identical, from which we conclude the behavior of the buyers are identical c)Although the values of the slopes are identical, the behavior of the buyers are different d)The values of the slopes are different, from which we conclude the behavior of the buyers are different
Use the following information for questions 12-14. Assume that there are two parties, I and V. I engages in an activity that tends to injure V. V and I both can take care to reduce the expected harm from accidents. Specifically, suppose that if I takes no care (i.e., spends $0 on accident precautions), expected injury to V is $25. If I spends $5 on accident precautions, however, the expected injury to V is reduced to $18. Further suppose that V has a choice between taking no care or spending $4 in care to avoid accidents. If V spends $4 in care, V’s expected harm falls by $2 regardless of the level of care that I takes. Assume that courts adopt the socially-optimal level of injurer care as the negligence standard. That is, if I takes less than the socially-optimal level of care, she will be found negligent and must pay for all damages to V. If I takes at least the socially optimal level of care, she will not have to compensate V for his damages. What is the Nash equilibrium of this…
This question is related to equilibrium and its drive? all detail is given in a snap.
Repeated Game Consider the game below, which is infinitely repeated at t = 1,2, .... Both players discount the future at rate d E (0, 1). The stage game is C C 5,5 0,6 D 6,0 1,1 1. The following three questions are about "Grim Trigger" strategies. (a) Describe the "Grim Trigger" strategy profile of this game. (b) Draw the finite automata representation of this strategy profile. (c) Find the lowest value of 8 for this strategy profile to form a subgame perfect equilibrium. 2. Suppose that the players play (C,C) in period t = 1, 3, 5, ... and plays (D,D) in period t = 2,4, 6, ... Compute the discounted payoff of each player. 3. Find a subgame perfect equilibrium such that, on the equilibrium path, (D,D) is played at periods t = 1, 3, 5, ..., and (C,C) is played at periods t = 2, 4, 6, ... Write down the finite automata representation for the strategy profile you proposed. Find the lowest value of d for the profile to form a subgame perfect equilibrium.
6
Ali Receives Utility From (D)omestic Vaccines from Kayseri, and the Sinovac Vaccine-(F)oreign. The utility structure is U(D,F)=D x F. The price of the foreign vaccine because of increasing returns to scale is $200, whereas at its earlier stages, the domestic vaccine is produced at a higher cost, and higher price of $250. The government has given each and every citizen a fixed payment of $8000 to spend just on vaccines, but it has not specified which vaccines. a- Does Ali Solve the Utility Maximization Question in an interior equilibrium or a corner solution? How do you know? What condition does the interior equilibrium necessitate regardless. b- Find Ali's Utility Maximizing Level of Domestic and Foreign Vaccines when he uses just the government allowance on vaccines? What is his utility level? C- Suppose the government wants to decrease Turkey's health exports. It pushes a vaccine subsidy, just for domestic vaccines that makes the price of domestic equal to $160. How does the utility…
Can Question 10 be answered?
Please do not answer question in picture. Please demonstrate the graph as a supply and demand graph with all axes labels that include price, quantity, reason for shift depicted, original prices, and original quality.
4
1
Given a market model as follow: Q1 = a – bP1 + eP2 – f P3 (a, b, e, ƒ > 0) (c, d, g,h > 0) (1) (2) Q1 = -c + dP, – gT + hS where Q, is quantity of Good 1, P, is price of Good 1, P, is price of Good 2, Pz is price of Good 3, T is an excise tax and S is a government subsidy. iv) Find the value of P; by using substitution technique.
Consider the version of the Beauty Contest game from the class, in which the players are trying to guess the average guess minus one. More precisely, the utilities now are: ui (si; sj ) = -|si-(-1)| where sj/#l forj belong tI (a) Which strategies are strictly dominated in this game, and by which alternative strategies? And so, what is the set of strategies BR11 (b) What is the set BR21 ? What is the set BRni for any n > 0?