Jane is interested in buying a car from a used car dealer Her maximum willingness to pay for the car is $12 (thousand). Bo,the dealer, is willing to sell the car as long as he receives at least $6 (thousand). Thus, there is a potential surplus or gainfrom trade of $6 (thousand). Jane and the dealer bargain over the transaction price, p. If they cannot agree on a price, thenthe transaction does not occur, and neither party receives any surplus.If instead, Bo can only get $5 (thousand) elsewhere, then the price that maximizes the Nash product changes by Sthousand (Enter your response rounded to one decimal place and include a minus sign if necessary)This change in price is infavor:

The gain realized by a producer when he/she is able to sell a good at price that is higher than his…

Answered: Jane is interested in buying a car from…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Suppose costumer 1's endowment is (a₁, b₁) = (3, 7) and consumer 2's endowment is (a2, b₂) = (7,3). Consumer 1 has preferences 1 at the competitive equilibrium, how much of good b does = u₁ (a₁, b₁) = a₁b₁, and consumer 2 has preferences u2(a2, b₂) = a₂b₂. If Pa = Pb consumer 1 consume at the competitive equilibrium? O O 4 O 1 O O 2 5 6 8 09
6 Consider the following policy game. The house of representatives (player 1) can propose a new federal minimum wage of x ∈ [10, 20]. The senate (player 2) can either accept the proposal or reject it and maintain the current level. After player 1 proposes x, player 2 observes the proposal and decides whether to accept or reject it. If proposal x is accepted then payoffs are u1(x) = 5+x for player 1 and u2(x) = 20−x for player 2. If player 2 rejects the proposal then both players get a payoff of 7.25. ( a) Draw the game tree. How many subgames does it have? Give an example of a strategy of each player. (b) Find a subgame perfect equilibrium of this game. Is it unique?
Suppose you find that MU1(X1Xx2)=2x2 and MU₂(x1+x₂)=2x1. What is the rate at which the consumer is willing to trade good 2 for good 1 at bundle (2,4)? (Note: enter a positive number, i.e. enter the quantity of good 2 that the consumer is willing to give up for an additional-marginal-unit of good 1.) Question 21 Suppose a consumer is always willing to give up 5 units of good 2 for an additional unit of good 1. For this consumer: Good 1 and good 2 are perfect complements Good 1 and good 2 are perfect substitutes Good 1 and good 2 are both essential goods None of the above
Suppose that consumer I has the utility function u(x,y) = x + 2y and consumer II has the utility function u(x,y) = min{x, 2y}. Consumer I initially has 12 units of y and zero units of x, while consumer II has 12 units of x and zero units of y. It is correct to state that, in competitive equilibrium, the agents' consumption basket will be:
You have preferences u(x,y) = xy over games (X) and videos (Y) you can buy on a platform and a $360 budget, with prices px = 9 and py = 6. How much would you be willing to pay (at most) as a subscription fee for each of the following plans (you can buy any amount of Y in each plan at the original price, unless otherwise stated): (a) Plan A : You can buy (any amount of) X at a discounted price px = 4(b) Plan B : You are given 40 units of X for free, but you cannot buy any more of X. (surely can buy any amount of Y)(c) Plan C : You are given 30 units of X for free, but you cannot buy any more of X; you also have a discounted price for good Y; py = 4.
Jia is considering whether to go out to dinner at a restaurant with her friend. The meal is expected to cost $40, Jia typically leaves a 20% tip, and an Uber will cost $5 each way. Jia values the restaurant meal at $25. Jia enjoys her friend s company and is willing to pay $30 just to spend an evening with her.
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)…
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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 $350,000
Suppose you find that MU1(X1Xx2)=2x2 and MU₂(x1+x₂)=2x1. What is the rate at which the consumer is willing to trade good 2 for good 1 at bundle (2,4)? (Note: enter a positive number, i.e. enter the quantity of good 2 that the consumer is willing to give up for an additional-marginal-unit of good 1.) Question 20 Suppose you find that the expressions of the marginal utilities for a consumer are given by MU1 (1,2)= 2 and MU₂ (1,2)= 7. Then you can conclude that: This consumer has Cobb-Douglas tastes For this consumer good 1 and good 2 are perfect complements For this consumer good 1 and good 2 are perfect substitutes None of the above Question 21 Suppose a consumer is always willing to give up 5 units of good 2 for an additional unit of good 1. For this consumer: Good 1 and good 2 are perfect complements Good 1 and good 2 are perfect substitutes Good 1 and good 2 are both essential goods None of the above
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Consider the golfing question from above. Suppose that Ken values golfing for the afternoon at $65. That is, he puts a price on his happiness from golfing for the afternoon at $65. Should he go golfing? Why or why not? Yes, he should go golfing because his enjoyment ($65) is greater than the $30 price. No, he should not go golfing because the fees ($30) are greater than his lost income. Yes, he should go golfing because his enjoyment ($65) is greater than his lost income from not working ($60). No, he should not go golfing because his enjoyment ($65) is less than the cost ($90). Yes, he should go golfing. You should always go golfing when you get the chance!

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