Barbara is trying to sell her Apple computer; however, none of the potential buyers is willing to pay the price Barbara desires. Barbara's friend Zeynep, an economist, thinks this might be due to a lack of information on the part of buyers. Zeynep uses the concept of___ to explain to Barbara why she cannot sell her computer at the price she is asking 1) supply and demand O2) adverse selection 3) moral hazard 4) None of the above answers are correct

Barbara is trying to sell her Apple computer; however, none of the potential buyers is willing to pay the price Barbara desires. Barbara's friend Zeynep, an economist, thinks this might be due to a lack of information on the part of buyers. Zeynep uses the concept of___ to explain to Barbara why she cannot sell her computer at the price she is asking 1) supply and demand O2) adverse selection 3) moral hazard 4) None of the above answers are correct

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter3: Preferences And Utility

Section: Chapter Questions

Problem 3.9P

See similar textbooks

Similar questions

Q3. The table below depicts the maximum buying prices and minimum selling prices that potential buyers and sellers have for a horse. Assume that a horse is considered to be a good of the first order. Potential Buyer $300 $280 $260 $240 $220 $210 $200 $180 $170 $150 Al A2 A3 A4 AS A6 A7 A8 A9 A10 Potential Seller $100 $110 $150 $170 $200 $215 $250 $260 Bl B2 B3 B4 B5 B6 B7 B8 (a). Based on the original valuations of potential buyers and sellers in the table above, identify the market clearing price that will bring this market to a state of rest. Provide a description of the important properties of this price. (b). Distinguish between the original valuations with which the market participants enter the market and the momentary valuations that prevail when they engage in exchange. Focusing on the potential sellers, explain why each of them would try to align their momentary valuations with the market clearing price? (c). Assume now that trade takes place at a price that is not the market…
In 2010 the government’s main medical adviser drew up plans for a minimum price foralcohol intended to double the cost of some drinks.Under the proposal no drinks could be sold for less than 50 pence per unit of alcohol theycontain. This would mean most bottles of wine could not be sold for under £4.50. Theproposal is aimed at reducing alcohol abuse. A spokesman for an opposition party saidthat it was more important to deal with peoples’ attitudes and not just the price of alcohol.The Portman Group, set up by drinks manufacturers to promote sensible drinking, arguesthat it would damage the majority of drinkers who behave responsibly in terms of theirconsumption.The NHS bill for alcohol abuse is an estimated £2.7bn a year. Recent figures showhospital admissions linked to alcohol use have more than doubled in England since 1995.Alcohol was the main or secondary cause of 207,800 NHS admissions in 2006/7,compared to 93,500 in 1995/96. The number of alcohol-related deaths in England…
Juanita is deciding whether to buy a skirt that she wants, as well as where to buy it. Three stores carry the same skirt, but it is more convenient for Juanita to get Disceunted prie to some stores than others. For Marked p price example, she can go to her local store, located 15 minutes away from where she works, and pay a marked-up price of $102 for the skirt: anita's office Original pre Travel Time Each Way Price of a Skirt (Dollars per skirt) Store Local Department Store (Minutes) 15 102 Across Town 30 85 Neighboring City 60 76 Juanita makes $42 an hour at work. She has to take time off work to purchase her skirt, so each hour away from work costs her $42 in lost income. Assume that returning to work takes Juanita the same amount of time as getting to a store and that it takes her 30 minutes to shop. As you answer the following questions, ignore the cost of gasoline and depreciation of her car when traveling. Complete the following table by computing the opportunity cost of…
What is a willingness to pay? How does this relate to the concept of demand? When determining the cost of manufacturing a product, what considerations are included in the cost? Provide an example of a product and explain each consideration in relation to your example. When purchasing construction materials for a home renovation, what factors should a homeowner consider? Provide an example of a green building product—a sustainable alternative construction material—and explain each factor in relation to your example. Address how the choice of using this particular green building product might influence and be influenced by supply and demand. What assumptions do economists make? Why does each assumption matter in environmental economics? Is the environment an economic asset? Is the environment a social asset? How does global demand for fish affect marine natural resource economics? How is the supply of forest goods influenced by privately and publicly owned forests? Why has supply and…
Assume you have your car broken down just before the weekend. You value your weekend trip as muchas v and if you have to stay home you get the zero utility. There are two dealerships in your town. Atthe beginning of the day they simultaneously choose a price for repair. Dealers know that when you cometo one of them and observe the price, you can always call to another dealer to make an inquiry about hisprice. The call is costless. The other dealer, however, can be occupied for this day. Assume, this happenswith probability which is a common knowledge (but the dealers do not know whether the other dealer isoccupied or not). Assume zero repair cost for the dealer and find a symmetric equilibrium of the game.
Consider a town with a single street of 1 km long with 3,000 people spread uniformly along it. Two stores, 1 and 2, are located at the opposite ends of the street and sell the same product (store 1 is locatedattheleftend).Thecostofwalkingist1 =$6perkmtostore1andt2 =$9perkmtostore2for each consumer. The net utility of a consumer located at point x from buying a product at store 1 is U1(x) = 100 – p1 – t1x, where pi is a price of the product at store i = 1,2. The net utility from buying at store 2 is U2(x) = 100 – p2 – t2(1 – x). The average cost of the product for each store is c = 4. (a) Assume that all consumers buy product from the sellers. Find the demand functions Di(p1,p2) and the profit functions πi(p1,p2) for each store i = 1,2 as functions of prices p1,p2.(b) Find the equilibrium prices.
People are more likely to purchase a consumer ratings magazine that reviews new automobiles before buying a new car than they are to purchase a consumer ratings magazine that reviews pens and pencils before buying a new pen or pencil. Which of the following best explains this behavior? O Because the consumer ratings magazine must have a higher price for the issue reviewing pens and pencils. Because the value of the information, in terms of avoiding a mistake on the purchase, is much higher for an automobile than for a pen or pencil, it is more worthwhile to gather this information. Because people generally do not know which products are reviewed by these consumer magazines. None of the above explain this behavior.
please only do: if you can teach explain each partc: what does it mean? can you show graphs: show WARP : If the consumer’s wealth is high enough that both bundles can buy with both prices then WARP violates If the consumer may not be spending all of her wealth, are her choices consistent withthe Weak Axiom of Revealed Preference (or is it impossible to determine)?: If the consumer’s wealth is high enough that both bundles are aordable atboth prices then WARP violates. why? Therefore, it is notpossible to know
You are in the market for a new couch and havefound two advertisements for the kind of couchyou want to buy. One seller notes in her ad that sheis selling because she is moving to a smaller apartment, and the couch won’t fit in the new space.The other seller says he is selling because the couchdoesn’t match his other furniture. Which seller doyou expect to buy from? Why? ( Hint: Think whowould be the more motivated seller.)
What do you think is more realistic approach between cardinal and ordinal approaches to consumer behavior? Explain why.
QUESTION 6 Which of the following was insight regarding optimal pricing that we gleaned from behavioral economics? O Make costs lump sum (integrate the costs into one cost) and separate allof the benefits of a purchase (separate the gains from an exchange). O Consumers always act rationally in their consumption decisions. O Expectations about products' prices don't matter for consumer behavior - all that matter's is the price they actually face, O Default choices for consumers don't matter for their behavior. QUESTION 7 Which of the following are the conditions for a firm to be able to profitably engage in bundlhpg?. O There is variation in consumers' willingness and abilities to pay for the goods, and consumers' valuations of the goods are positively correlated. O Consumers must like the bundled goods relatively equally. Consumers' preferences across the goods are relatively consistent with each other. O There is variation in consumers' willingness and abilities to pay for the goods,…
- Cons X ∞ Chapter 6 - Cons X sments/632bc3fe081cee0063847766 00 Course Catalog - X ∞o Exam 1 - Chapter X = 6.2 How Changes X Chapter 6 - Consumer Choice OPEN OFirst Class Economy What is the Marginal Utility per Dollar for an economy ticket? Will Ari be better off booking a first class or an economy ticket? 00 Course Catalog - x + Ari needs to book a flight between Minneapolis and Los Angeles and has a choice between flying in first class or economy. A first class ticket costs $1140 and an economy ticket costs $200. The first class ticket generates $1430 of utility and the economy ticket generates $380 value of utility. Note: A purchase generating utility tells us the marginal utility of the good. What is the Marginal Utility per Dollar for a first class ticket? I 12 ☆ 9- la