Below is a graph of the hedonic model of housing prices. Describe the offer curves; the bid curves and what the points of tangency between the two mean. Describe the consequence of a mismatch between high(low) cost firms and high(low) demand housing consumers. (Hedonic Model) Offer high Bid low Offer low Bid high

Below is a graph of the hedonic model of housing prices. Describe the offer curves; the bid curves and what the points of tangency between the two mean. Describe the consequence of a mismatch between high(low) cost firms and high(low) demand housing consumers. (Hedonic Model) Offer high Bid low Offer low Bid high

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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New Zealand possums produce the highest quality fur, due to the large pelts per body size. Demand for New Zealand possums’ products has risen dramatically. This is partly a result of the conservation benefits of harvesting New Zealand possums. This has made the product seem more environment friendly than other fur products and boosted sales to concerned consumers. Assume that the possums market satisfies all the attributes of a competitive market. Further assume that high grade possum furs are the most expensive input into the possum fur production function. 1. Use a graph of the market for possum fur to demonstrate the effect of its environmentally friendly status on the market equilibrium. 2. Graph the reaction of an individual incumbent firm to the increase in market demand. In your graph, identify the firm’s revenue and cost structures. 3. What would you predict would happen to long-run industry supply if the price of possum fur increased as possum culling increased their…
I pretty sure I got the first part right. I am struggling with bottom parts.
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