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demand with zero transaction costs is Q( to the 1st power)D= 50-P and supply is Qs=-7+ 2P.
a. Verify all the prices and quantities calculated in the discussion.
b. Now assume that intermediaries come from a competitive market with and equilibrium price of $8 per unit for their services, that is, any buyer or seller who wants an intermediary's services must pay $8 for them. What is the maximum per unit that sellers are willing to pay intermediaries if hiring them saves buyers $8 in transaction costs?
c. Does your answer to Question 16a change if buyers pay $8 per unit to the intermediary but sellers offer to rebate part of that expense to buyers
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Suppose that fixed costs increase by $50 but the prevailing market price remains unchanged. Using algebra determine the effects of this change in cost on the profit maximizing output and the optimal profit. Do you see any change from your answer t..
Assume that all wages and prices are completely and immediately flexible. If the growth rate of the money supply is 5%, the growth rate of the velocity of money is 8% and the inflation rate is 9%, what is the Solow growth rate?
Answer the following questions using the above data. Compute autonomous aggregate demand and compute the short-run output.
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