A voluntary exchange between Mike (the purchaser) and Wayne (the seller) occurs because Mike stands to gain and Wayne to lose they had no choice Mike stands to lose and Wayne to gain they both gain from the transaction
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A voluntary exchange between Mike (the purchaser) and Wayne (the seller) occurs because
Mike stands to gain and Wayne to lose
they had no choice
Mike stands to lose and Wayne to gain
they both gain from the transaction
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- Two consumers, Emmet and Franz have preferences over two goods, A (on the horizontal axis) and B. Emmet's utility function is UĒ(A, B) = 5A + 10B, while Franz's utility function is UƑ(A, B) = 10A + 6B. Emmet has £140 to spend, while Franz has £125 to spend. The market demand and supply functions for good A are: Qd = 200 - 4P; Qs = 50 + 8P. The market demand and supply functions for good B are: Qd = 550 - 12P; Qs = 200 + 8P. Which of the following is correct? O Emmet will purchase 8 units of good A and 0 units of good B, while Franz will purchase 0 units of good A and 10 units of good B. Emmet will purchase 11.2 units of good A and 0 units of good B, while Franz will purchase 10 units of good A and 0 units of good B. Emmet will purchase 8 units of good A and 0 units of good B, while Franz will purchase 7.1 units of good A and 0 units of good B. Emmet will purchase 5 units of good A and 10 units of good B, while Franz will purchase 10 units of good A and 6 units of good B. Emmet will…The personal likes and dislikes that make buyers more or less inclined to purchase a good are Multiple choice question. consumer preferences. always constant. always changing. producer preferences.Describe the benefits of an auction to thebuyer and the seller.
- Consider a two-good exchange economy with two types of consumers. Type A have the utility function And an endowment of 3 units of good 1 and k units of good 2. Type B has the utility function And an endowment of 6 units of good 1 and 21 - k units of good 2. a. Find the competitive equilibrium outcome and show that the equilibrium price p* = p1/p2 of good 1 in terms of good 2 is p* = 21+k/15. b. Find the income levels (MA; MB) of both types in equilibrium as a function of k. c. Suppose that the government can make a lump-sum transfer of good 2, but it is impossible to transfer good 1. Use your answer to part b to describe the set of income distributions attainable through such transfers. Draw this in a diagram. d. Suppose that the government can affect the initial distribution of resources by varying k. Find the optimal distribution of income if (i) the SWF is W = log(MA) + log(MB) and (ii) W = MA + MB.Efficiency in a market occurs where: a) + Marginal benefits = 0 b) € Marginal costs = c) + Total costs = total benefitse d) Marginal costs = marginal benefitseThere are two restaurants next to each other. Restaurant 1 (R1) sells burritos and Restaurant 2 (R2) sells burgers. Both restaurants have to simultaneously set their prices which can be any non-negative 1 real number. Denote by p1 the price of a burrito set by R1 and by p2 the price of a burger set by R2. Since consumers have a choice of which restaurant to go to and are price conscious, the price of each restaurant, besides impacting the demand for its own product, effects the demand for the product of the other restaurant as well. Specifically, the demand functions for the burritos sold by R1 and burgers sold by R2, denoted q1 and q2, respectively, are given by: q1 = 44 − 2p1 + p2 q2 = 44 − 2p2 + p1 (For simplicity, we are assuming here that demand is perfectly divisible). Finally, the cost of producing each unit of burger and burrito is the same and equal to 8. Model this strategic environment as a normal form game and find a pure strategy Nash equilibrium. Is the equilibrium you…
- Damian and Kira trade in antique cars. They typically buy either 1 or 2 cars at any given time, since they are difficult to find and expensive. The price per car P(Q) where Qis the total number of cars traded at a given time, is determined by the demand equation: K P(Q) 1 where K is a positive constant. If a € {1, 2} is Damian's choice and b = {1,2} is Kira's choice, (so Q = (a + b)) it costs Damian 2a to find and prepare a cars for market, and it costs Kira 3b to get b cars ready for market. Damian has better connections and access the cars before Kira, and so Damian chooses his value of a first. Kira then chooses his value of b, knowing Damian's choice. Their choices are determined by maximising their individual profits, ie the difference between how much they can sell their cars for, minus the total costs to prepare them for sale. (i) Express this game as an extensive form game tree, making sure to fully label all the nodes and links, and especially writing down their payoffs. (ii)…True or false: keeping his maximum willingness to pay for a yacht in mind, Tim will buy the yacht because it will be worth more to him than its market price of $350,000Juanita is deciding whether to buy a skirt that she wants, as well as where to buy it. Three stores carry the same skirt, but it is more convenient for Juanita to get to some stores than others. For example, she can go to her local store, located 15 minutes away from where she works, and pay a marked-up price of $102 for the skirt: Store Travel Time Each Way Price of a Skirt (Minutes) (Dollars per skirt) Local Department Store 15 102 Across Town 30 85 Neighboring City 60 76 Juanita makes $42 an hour at work. She has to take time off work to purchase her skirt, so each hour away from work costs her $42 in lost income. Assume that returning to work takes Juanita the same amount of time as getting to a store and that it takes her 30 minutes to shop. As you answer the following questions, ignore the cost of gasoline and depreciation of her car when traveling.
- You own a company that produces coasters. You set the price at $10 for a set of six coasters. Then you produced 10,000 sets. After one year, you realize you have a surplus of 4,000 sets. What steps would you take to reach equilibrium?Quèstion 27 Table #2: The following table represents the costs of five possible sellers. Willingness to sell $1,500 Seller Abby Bobby $1,200 Carlos $1,000 Dianne $750 Evalina $500 Refer to Table#2. Who is (or are) reluctant seller(s) when the price is $1,200? Bobby O Abby O Abby & Booby Carlos, Diane, & Evalina
