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Q. This problem is an application of Akerlof's market for lemons. Assume there are 100 people who want to sell their cars also 100 people who want to buy a used car. 50 out of the 100 cars are lemons (i.e., very bad cars which will break down often). The owner of a lemon is willing to part with It for $1000 also the owner of a plum is willing to part with it for $2000. The buyers of the car are willing to pay $2400 for a plum also $1200 for a lemon.
a) Illustrate what is the maximum amount of consumer surplus created by trade in this market equilibrium?
b) Elucidate how much consumer surplus would be created by randomly assigning buyer to sellers? Which method gives the larger surplus?
Will there be significant progress on the poverty front, because of an increase in GDP.
If the economy is competitive so that factors of production are paid the value of their subsidiary products, what is the share of total income that will go to land.
Illustrate what would be the cost saving of this change
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PbP Company have pay $10,000 to disassemble and ship the furnace to the new owner. What is the net cash flow after tax as it will result from selling this furnace in the year 2012.
The widget Industry in Any town is a monopoly, controlled by Widget Corp. Its demand curve for the local market is given.
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A Fenway park, home of the Boston Red Sox, seating is limited to 39.000. Hence, the number of tickets issued is fixed at that figure. Seeing a golden opportunity to raise revenue.
What is the highest possible total revenue that the team can hope to collect
Elucidate how much profit will it earn at that output rate. If the marketplace price dropped to $10, illustrate what should the firm do.
The electric power industry is held up in the article as an example of a natural monopoly. Brainstorm other examples that can be readily identified in the present market economy.
Illustrate what might a more proactive Motorola have done dissimilarly had it correctly perceived the steps its rival Nokia would take.
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