In a market there are 10 sellers and 4 buyers and the opp cost for seller...

In a market there are 10 sellers and 4 buyers and the opp cost for seller is $3.00 and opp cost for the buyer is $10.00. Then what will be the price that trade will take place at? Explain why. What will a price that buyers will say NO to (if any)? What will be a price that seller will say NO (if any)?

Solutions

Expert Solution

At Any price which is above opportunity cost of sellers and below opportunity cost of buyers will lead to trade. Trade will take place if buyers do not have higher than opportunity cost and sellers do not get lower than opportunity cost.

Therefore 3<p<10.

Any price above 10 buyers will say to, p>10

Any price below 3 sellers will say no to, p<3.

Rahul Sunny answered 1 year ago

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