Consider a pricing problem with two sellers, A and B, and 12 buyers, who each have...

Consider a pricing problem with two sellers, A and B, and 12 buyers, who each have a unit demand for a good provided the price is no more than 4. Each seller can produce a good on order at price 1.
Sellers announce prices simultaneously, pA and pB respectively. Buyers 1-6 see Player A's price but not Player B's. Likewise buyers 7-12 see Player B's price but not Player A's.Each buyer can choose to buy from the seller whose price he sees or to walk over to the other seller (at a cost of $0.10), when he can buy from that seller or walk back to the seller whose price he saw originally (for another 10c) and buy from her.

The payoffs are the standard ones in pricing problems. In addition, buyers have to subtract the cost of travel, if any.

What are the equilibrium prices announced by the sellers? Each can choose a price in[1,4].

Expert Solution

The seller A and seller B have equal buyers

Seller A have 1-6 buyers

Seller B have 7- 12 buyers

The production charges for seller A and B are the same which is 1 dollar

Here the price range should be 1- 4 not more than 4 so in the case of having equal buyers the sellers could charge less than 3 dollars because some of the buyers have travel expenses as mentioned 0.10 dollars so, both the sellers will come to an equilibrium point of prices

So the seller A and B will give the product at 2dollars which is acceptable by the buyers

Rahul Sunny answered 2 years ago

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,...

Consider a market for used cars. There are 100 sellers and 100 buyers. The sellers know...

Consider a market for used cars. There are 100 sellers and 100 buyers. The sellers know the qualities of their cars, but the buyers only know that the quality θ of each used card is uniformly distributed over interval [0, 1]. The seller’s value of a car with quality θ is θ. (Thus, market supply is S(p) = 100p for 0 ≤ p ≤ 1 and S(p) = 100 for p > 1.) Each of 50 buyers values a car...

Consider a market with 22 sellers and 21 buyers. Of 22 sellers, there are 15 "high-cost"...

Consider a market with 22 sellers and 21 buyers. Of 22 sellers, there are 15 "high-cost" sellers with production costs of $30 per unit and 7 "low-cost" sellers with costs of $10 per unit. Of 21 buyers, there are 14 "high-value" buyers with values of $40 per unit and 7 "low-value" with values of $20 per unit. For this market, identify and graph the demand and supply curves. Finally, predict the equilibrium price and quantity in the market.

If a tax is imposed on sellers of a good, who is more affected- buyers or...

If a tax is imposed on sellers of a good, who is more affected- buyers or sellers? Can the buyers avoid the tax altogether? Use a diagram to explain.

The Securities Act provision 10(b) requires that all buyers and sellers of stock have access to...

The Securities Act provision 10(b) requires that all buyers and sellers of stock have access to the same information. Please, give an example of a violation of this rule and how it might occur. (insider trading).

1-Explain why sellers and buyers share the burden of the tax regardless of who it is...

1-Explain why sellers and buyers share the burden of the tax regardless of who it is levied on. 2-Explain why raising the minimum wage is not the best way to help unskilled workers?

Markets that are characterized by many buyers and many sellers are: A) foreign. B) monopolies. C)...

Markets that are characterized by many buyers and many sellers are: A) foreign. B) monopolies. C) inefficient. D) competitive he difference between the demand price and the supply price at the quota limit is: A) the rent received by landlords who own rent-controlled apartments B) the quota rent C) usually large enough to cause a surplus. D) the opportunity cost of using or buying a good, subject to an import quota. page24image2423078000 The figure above illustrates the rental housing market...

Consider a market for used cars. There are many sellers and even more buyers. A seller...

Consider a market for used cars. There are many sellers and even more buyers. A seller values a high quality car at 800 and a low quality car at 200. For any quality, the value to buyers is m times the value to sellers, where m > 1. All agents are risk-neutral. Sellers know the quality of their own car, but buyers only know that 2/3 of the cars are low quality and the remaining 1/3 of them are high...

Consider an ONLINE_AUCTION database system in which members (buyers and sellers) participate in the sale of...

Consider an ONLINE_AUCTION database system in which members (buyers and sellers) participate in the sale of items. Design an ER/EER diagram for this ONLINE_AUCTION database. The data requirements for this system are summarized as follows: • The online site has members, each of whom is identified by a unique member number and is described by an e-mail address, name, password, home address, and phone number. • A member may be a buyer or a seller. A buyer has a shipping...

A tax a. lowers the price buyers pay and raises the price sellers receive. b. raises...

A tax a. lowers the price buyers pay and raises the price sellers receive. b. raises the price buyers pay and lowers the price sellers receive. c. places a wedge between the price buyers pay and the price sellers receive. d. Both b) and c) are correct.

Question