Question

In: Economics

Consider a market in which suppliers know of a potential quality control problem associated with a...

Consider a market in which suppliers know of a potential quality control problem associated with a good. Buyers are unaware of the quality issue.

Use a diagram to show how this situation affects the market.

Explain how the government could potentially intervene in this market and how doing so would affect social surplus.

Solutions

Expert Solution


Related Solutions

Consider a market in which suppliers know of a potential quality control problem associated with a...
Consider a market in which suppliers know of a potential quality control problem associated with a good. Buyers are unaware of the quality issue. A. Use a diagram to show how this situation affects the market. B. Explain how the government could potentially intervene in this market and how doing so would affect social surplus.
As a quality control engineer, you’re examining the performance of two of the suppliers (A and...
As a quality control engineer, you’re examining the performance of two of the suppliers (A and B) of a key sub-assembly in a system that your factory produces. You purchased a total of 387 batches of parts from Supplier A and 283 batches from Supplier B. When batches arrive, you inspect them to determine if they meet quality standards: batches either “meet” or “fail to meet” standards. The past quality data that you’ve collected appears below. a. From Supplier A,...
10. The market for lemons Consider a market in which there are many potential buyers and...
10. The market for lemons Consider a market in which there are many potential buyers and sellers of used cars. Each potential seller has one car, which is either of high quality (a plum) or low quality (a lemon). A seller with a low-quality car is willing to sell it for $5,000, whereas a seller with a high-quality car is willing to sell it for $9,500. A buyer is willing to pay $6,000 for a low-quality car and $10,500 for...
Obviously, it is important to know which suppliers are good and which are bad. There are...
Obviously, it is important to know which suppliers are good and which are bad. There are many ways companies attempt to develop & maintain this knowledge. Some ways are easy to develop and use, others are hard. 1) Give an example of at least 3 different ways you could attempt to measure whether a vendor is good or bad. 2) Under what circumstances would you prefer each approach?
Levi-Strauss Co manufactures clothing. The quality control department measures weekly values of different suppliers for the...
Levi-Strauss Co manufactures clothing. The quality control department measures weekly values of different suppliers for the percentage difference of waste between the layout on the computer and the actual waste when the clothing is made (called run-up). The data is in the following table, and there are some negative values because sometimes the supplier is able to layout the pattern better than the computer ("Waste run up," 2013). Table #11.3.3: Run-ups for Different Plants Making Levi Strauss Clothing Plant 1...
Levi-Strauss Co manufactures clothing. The quality control department measures weekly values of different suppliers for the...
Levi-Strauss Co manufactures clothing. The quality control department measures weekly values of different suppliers for the percentage difference of waste between the layout on the computer and the actual waste when the clothing is made (called run-up). The data is in table #11.3.3, and there are some negative values because sometimes the supplier is able to layout the pattern better than the computer ("Waste run up," 2013). Do the data show that there is a difference between some of the...
Levi-Strauss Co manufactures clothing. The quality control department measures weekly values of different suppliers for the...
Levi-Strauss Co manufactures clothing. The quality control department measures weekly values of different suppliers for the percentage difference of waste between the layout on the computer and the actual waste when the clothing is made (called run-up). The data is in Table #11.3.3, below, and there are some negative values because sometimes the supplier is able to layout the pattern better than the computer (Waste run up, 2013). (11.3.2) Do the data show that there is a difference between some...
Consider a market in which there are many potential buyers and sellers of used cars. Each...
Consider a market in which there are many potential buyers and sellers of used cars. Each potential seller has one car, which is either of high quality (a plum) or low quality (a lemon). A seller with a low-quality car is willing to sell it for $4,500, whereas a seller with a high-quality car is willing to sell it for $8,500. A buyer is willing to pay $5,500 for a low-quality car and $10,500 for a high-quality car. Of course,...
Cesar wants to know what the expected weight of a loaf of bread for quality control...
Cesar wants to know what the expected weight of a loaf of bread for quality control purposes. Based on a sample of 14 loaves of bread, he finds a sample average of 400 grams with a sample standard deviation of 15 grams. What’s the confidence interval at 95%?  What is it at 99.9%? What would the confidence intervals (for 95% and 99.9%) be if the sample average was based on 140 loaves instead of 14?
Consider a new market in which we have five potential sellers.Seller A has costs of...
Consider a new market in which we have five potential sellers. Seller A has costs of $20, Seller B has costs of $41, Seller C has costs of $19, Seller D has costs of $25, and Seller E has costs of $31. If the good produced has a market price of $30, total producer surplus in the market will equal $________.(Carefully follow all numeric directions.)
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT