Foundations of Economics (8th Edition)
Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Chapter 6, Problem 11SPPA
To determine

To state:

The method used by Company E to allocate goods and the way an auction can affect the consumer surplus from the good.

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Shana decides to buy a pair of used ripped jeans for $80. She was willing to pay $100. When her friend tanya sees the jeans, she loves them and thinks they are worth $165. So she offers shana $135 for the jeans, and shana accepts. Shana and tanya are both thrilled with the exchange. The total surplus received by both shana and tanya is $ ? Part 2 Suppose that shana purchased the jeans from Maries boutique. Marie and other boutique owners in town are upset that customers like shana buy jeans at their stores, and then resell them for a higher price. Marie and the other owners convince the city government to pass a law preventing such resale. Assuming the law is successful, how much surplus is lost if shana cannot sell the jeans to tanya? $. ?
Suppose a local bank increases the fees they charge for their bank accounts by 25 percent. In response, the demand for their bank accounts decreases from 15,000 to 5,000 . What is price elasticity of demand for this bank's accounts? Using the midpoint formula, the price elasticity of demand is (Enter your response rounded to two decimal places.)
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