ECON MICRO (with MindTap, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)
6th Edition
ISBN: 9781337408059
Author: William A. McEachern
Publisher: Cengage Learning
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Question
Chapter 14, Problem 5P
a)
To determine
The effects on the optimal level of search when there is an increase in the consumer's wage, keeping other things as constant.
Concept Introduction: Search refers to the process of surveying a number of sellers or buyers to determine the lowest
b)
To determine
The effects on the optimal level of search when one seller guarantees to propose the lowest price on the market.
Concept Introduction: Search refers to the process of surveying a number of sellers or buyers to determine the lowest price. In case of imperfect knowledge, there exists price dispersion. At the optimal level of search, the expected marginal return is equal to the cost of search. Both consumers and sellers incur search costs in the hope to find the best alternative with their limited means.
c)
To determine
The effects on the optimal level of search when there is an improvement in the technology of gathering and transmitting market information.
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Question 6
[A new drug called 'LowG', taken together with any food, reduces the glycemic index
(a measure of the impact of the food on blood sugar) by 50%. Annual demand for this
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Quantity (millions of
milligrams)
0
200
400
600
800
1000
1200
1400
1600
1800
2000
Price ($)
1000
900
800
700
600
500
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200
100
0
a) [Rache, a pharmaceutical company, holds the patent on LowG and therefore
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Revenue (TR) and Marginal Revenue (MR) correctly calculated.
23. Suppose that demand in a market increases due to larger
number of buyers and a technological advancement occurs
also. What would we expect to happen in the market?
(a) Equilibrium quantity would increase, but the impact on
equilibrium price would be indeterminate.
(b) The equilibrium price would decrease, but the impact on
the amount sold in the market would be indeterminate.
(c) Both equilibrium price and equilibrium quantity would
increase.
(d) The equilibrium price would increase but the impact on
the amount sold in the market would be indeterminate.
18. _____________________refers to various quantities of a commodity or service that a consumer would purchase at a given time at various prices in a market.
Chapter 14 Solutions
ECON MICRO (with MindTap, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)
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