Economics: Private and Public Choice
16th Edition
ISBN: 9781337642224
Author: James D. Gwartney; Richard L. Stroup; Russell S. Sobel
Publisher: Cengage Learning US
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Question
Chapter 2, Problem 15CQ
To determine
Meaning of legal ability to exchange.
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Students have asked these similar questions
Economics
CHOOSE THE CORRECT ANSWER.
Remember that in the equilibrium prediction of an
ultimatum game, the Proposer will offer the
smallest non-zero amount of money possible.
First-year Commerce students were asked to play an Ultimatum game where a choice had to be made over the division of R100. Offers could only be
made in R10 increments, and the results of the various offers made are reported in the table below.
Amount offered by Proposer
RO
R10
R20
R30
R40
R50
Proportion rejected
100%
60%
50%
30%
10%
0%
What is the equilibrium split of the R100 between the Proposer and the Responder?
O A. Proposer: R50, Responder: R50
O B. Proposer: R10, Responder: R90
O C. Proposer: R90, Responder: R10
O D. Proposer: R60, Responder: R40
O E. Proposer: R40, Responder: R60
In Hayward, there are 100 people who want to sell their used cars. Everybody knows that 50 of
these cars are "lemons" and 50 of these cars are "peaches." The problem is that nobody except the
original owners know which are which. Owners of lemons will be happy to get rid of their cars for
any price greater than $200. Owners of peaches will be willing to sell them for any price greater
than $1,500 but will keep them if they can't get $1,500. There are a large number of buyers who
would be willing to pay $2,500 for a peach but would pay only $300 for a lemon. When these
buyers are not sure of the quality of the car they buy, they are willing to pay the expected value of
the car, given the knowledge they have.
If all 100 used cars in Hayward were for sale, how much would buyers be willing to pay for a used
car? Type the number without the thousands separator or $ sign.
Q11
Chapter 2 Solutions
Economics: Private and Public Choice
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