ECON393 Lecture Notes - Lecture 7: Pareto Efficiency
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The table below shows the marginal valuation which Sally and Tom place on various numbers of Grate Full Dead rock concert tickets
a)Assume that someone has given 5 tickets to Sally and 5 tickets to Tom. If Tom and Sally can exchange (buy and sell) tickets, who would buy tickets from whom?
b) Alternatively, assume that Tom is given 10 tickets and Sally gets none. If they can exchange, what final disposition of tickets do you expect.
Number Of Tickets |
1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 |
Marginal Valuation By Sally | 60 | 40 | 30 | 25 | 22 | 20 | 18 | 12 | 8 | 6 |
Marginal Valuation | 25 | 20 | 18 | 15 | 12 | 10 | 8 | 5 | 3 | 1 |
a. Marginal revenue is calculated by finding the change in total revenue or the change in quantity. b. The higher the quantity the lower the sale price. c. When the average falls, the marginal revenue also falls. d. It costs less to provide a service in bulk. |
b. $160 c. $120 d. $70 e. $40 |