Principles Of Economics, Ap Edition, 9781337292603, 1337292605, 2018
8th Edition
ISBN: 9781337292603
Author: Mankiw
Publisher: Cengage Learning (2018)
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Question
Chapter 7, Problem 8PA
To determine
The equilibrium price and the quantity of haircuts and total surplus.
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Two street vendors (Vendor Y and Vendor Z) with mobile carts produce the same good which they sell at the same price. Customers are located along a linear boardwalk with six locations (Location A through Location F), with a different number of customers in each location, given by the number beneath each letter, as pictured below:
A
B
C
D
E
F
3
4
6
6
8
8
So, there are 3 customers in location A, 4 in B, 6 in C, 6 in D, 8 in E and 8 in F. The vendors simultaneously choose their location, and cannot move once their choice has been made. Customers will make a purchase from whichever vendor is closest to them, and equally close customers will be split evenly between Vendor Y and Vendor Z. The vendors CAN locate in the same location (so, both could locate in location A).
How many customers will Vendor Y capture in equilibrium? (Assume that it is possible to capture half a customer, if necessary).
Ilsia is driving home from work. She needs to buy gas and notices an Exxon-Mobil station on one side of the street and a Shell station on the other side of the street. Although run by different companies, the two stations sell gasoline at the same price.
a. The most likely reason that the price is the same is that
drivers need gas and are willing to pay whatever price a gas station charges.
consumers view gasoline from different gas stations as perfect substitutes.
government regulation requires both gas stations to charge the same price.
gas stations always make a profit, so they can charge any price they want.
b. If one station increases its price,
it will make a higher profit.
it will lose customers to the cheaper station across the street.
it will be fined by the government.
it will sell more gasoline.
A market consists of ten similar suppliers that are making the same supply decisions. To find the market supply of these ten suppliers, you:
SELECT THE CORRECT ANSWER
a.find the average quantity produced by the ten suppliers.
b.take one-tenth of the individual supply of each supplier and add it up.
c.take the individual supply of one supplier.
d.multiply the individual supply of one of the suppliers by ten.
Chapter 7 Solutions
Principles Of Economics, Ap Edition, 9781337292603, 1337292605, 2018
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