In a market, there are ten buyers and ten sellers each buying or selling one unit of the good. The values for the buyers are 11, 10 ,10 ,8.5 ,8 ,7 ,6 ,5.5 ,4 , 3. The costs for the sellers are 10.5, 10, 9.5, 8, 7, 5, 3.5, 3.5 ,2.5 ,1.
a) What is the equilibrium price in this market?
b) If every transaction took place at the price you found in part a), how many transactions would there be. Which buyers and which sellers would not be transacting?
In a market, there are ten buyers and ten sellers each buying or selling one unit of the good. The values for the buyers are 11, 10 ,10 ,8.5 ,8 ,7 ,6 ,5.5 ,4 , 3. The costs for the sellers are 10.5, 10, 9.5, 8, 7, 5, 3.5, 3.5 ,2.5 ,1.
a) What is the equilibrium price in this market?
b) If every transaction took place at the price you found in part a), how many transactions would there be. Which buyers and which sellers would not be transacting?
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Look at the two tables below, which show, respectively, the willingness to pay and willingness to accept of buyers and sellers of bags of oranges. For the following questions, assume that the equilibrium price and quantity will depend on the indicated changes in supply and demand. Assume that the only market participants are those listed by name in the two tables.
| Consumers | Producers | |||||
| Person | Maximum Price Willing to Pay |
Actual Price (Equilibrium Price) |
Person | Minimum Acceptable Price | Actual Price (Equilibrium Price) |
|
| Bob | $16 | $10 | Carlos | $5 | $10 | |
| Barb | 14 | 10 | Courtney | 6 | 10 | |
| Bill | 13 | 10 | Chuck | 7 | 10 | |
| Bart | 12 | 10 | Cindy | 8 | 10 | |
| Brent | 11 | 10 | Craig | 9 | 10 | |
| Betty | 10 | 10 | Chad | 10 | 10 | |
a. Given the equilibrium price of $10, what is the equilibrium quantity given the data above?
Equilibrium quantity = ...... bag(s)
b. What if, instead of bags of oranges, the data in the two tables dealt with a public good like fireworks displays?
If all the buyers' free ride, what will be the quantity supplied by private sellers?
c. Assume that we are back to talking about bags of oranges (a private good), but that the government has decided that tossed orange peels impose a negative externality on the public that must be rectified by imposing a $3-per-bag tax on sellers.
What is the new equilibrium price? $
What is the new equilibrium quantity?
....bag(s)
If the new equilibrium quantity is the optimal quantity, by how many bags were oranges being overproduced before?
.....bag(s)
