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Chapter 4: Q. 2 (page 91)
It is obvious how finding a provider of cabinet-installation services can reduce a consumer's transaction costs, but how can middlemen such as Amazon also reduce transaction costs for providers of such services?
By connecting them directly with the target consumers.
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In 2016,the government ofanation establisheda
price support for wheat.The government's sup
port price has been above the equilibrium price
each year since,and the government has pur
chased all wheat over and above the amounts that
consumers have bought at the support price.
Every year since 2016,there has been an increase
in the number of wheat producers in the market.
No other factors affecting the market for wheat
have changed.Predict what has happened every
year since 2016,to each of the following:
a.Amount of wheat supplied by wheat producers
b.Amount of wheat demanded by all wheat con
sumers
c.Amount of wheat purchased by the government
How might California cities alternatively have developed a rationing-by-queues approach using the internet?
Consider Figure 4-1.The current demand and
supply curves are D₁ and S₁,at which the equilib
rium price and quantity areP,and Q₁.If firms
adopt an improved technique for producing this
good,which curve shifts,and in which direction
does it shift?What happens to the market clearing
price and to the equilibrium quantity?
Why do you suppose that online dating companies provide each customer with only a small set of virtual roses to attach to date invitations?
Suppose that government places a ceiling on the price of a medical drug below the equilibrium price.
a. Show why there is a shortage of the medical drug at the new ceiling price.
b. Suppose that a black market for the medical drug arises, with pharmaceutical firms secretly selling the drug at higher prices. Illustrate the black market for this medical drug, including the implicit supply schedule, the ceiling price, the black market supply and demand, and the highest feasible black market price.
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