BestDeal.com and CrazySavings.com are two online retailers with free return policies. They sell the same brand of TV. The retailers' cost per TV is $1000. There are 100 buyers in the market. Each buyer has a perfectly inelastic demand for exactly one TV. Initially, each buyer pays for a TV from either website with equal probability. If the buyer finds out that the other website offers a strictly lower price. he/she will simply return the TV to the original website free of charge, and then buy a new one from the other website at the cheaper price. Let PBD be the price that BestDeal.com charges for the TV. Let prs be the price at
BestDeal.com and CrazySavings.com are two online retailers with free return policies. They sell the same brand of TV. The retailers' cost per TV is $1000. There are 100 buyers in the market. Each buyer has a perfectly inelastic demand for exactly one TV. Initially, each buyer pays for a TV from either website with equal probability. If the buyer finds out that the other website offers a strictly lower price. he/she will simply return the TV to the original website free of charge, and then buy a new one from the other website at the cheaper price. Let PBD be the price that BestDeal.com charges for the TV. Let prs be the price at
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Hand written plz asap please fast... I'll rate if hand written plz asap

Transcribed Image Text:BestDeal.com and CrazySavings.com are
two online retailers with free return
policies. They sell the same brand of TV.
The retailers' cost per TV is $1000.
There are 100 buyers in the market. Each
buyer has a perfectly inelastic demand for
exactly one TV. Initially, each buyer pays
for a TV from either website with equal
probability. If the buyer finds out that the
other website offers a strictly lower price,
he/she will simply return the TV to the
original website free of charge, and then
buy a new one from the other website at
the cheaper price.
Let PBD be the price that BestDeal.com
charges for the TV. Let pcs be the price at
CrazySavings.com. PBD and pcs can be
any positive real number.
Question: Is there an equilibrium in which
PBD = $1500?
O No
O Yes
Expert Solution

This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps with 1 images

Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you


Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON

Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON


Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON

Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON

Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning

Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning

Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education