There are five students who are looking to buy one second-hand textbook each. Their willingness-to-pay are $5, $6, $8, $12, and $15, respectively. Based on this information, which of the following statements is correct? Select one: a. If a seller is one of many identical sellers and his reservation price is $8, then he is guaranteed to sell his textbook. b. To sell three books, the maximum price that can be charged is $8. c. The student with a willingness-to-pay of $15 is the richest. d. Their willingness-to-pay indicates an upward-sloping demand curve.

There are five students who are looking to buy one second-hand textbook each. Their willingness-to-pay are $5, $6, $8, $12, and $15, respectively. Based on this information, which of the following statements is correct? Select one: a. If a seller is one of many identical sellers and his reservation price is $8, then he is guaranteed to sell his textbook. b. To sell three books, the maximum price that can be charged is $8. c. The student with a willingness-to-pay of $15 is the richest. d. Their willingness-to-pay indicates an upward-sloping demand curve.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter16: Bargaining

Section: Chapter Questions

Problem 16.1IP

See similar textbooks

Similar questions

Consider the following game: you and a partner on a school project are asked to evaluate the other, privately rating them either "1 (Good)" or "0 (Bad)". After all the ratings have been done, a bonus pot of $1000 is given to the person with the highest number of points. If there is a tie, the pool is split evenly. Both players only get utility from money. Mark all of the following true statements: A. The best response to your partner rating you as Good is to rate them as Good as well. Your answer B. There is no best response in this game. C. Your partner's best response to you rating them as Bad is to also rate you as C Bad. D. Your best response to any strategy of your partner is to play "Good".
In a sealed-bid, second-price auction with complete information, the winner is the bidder who submits the second-highest price, but pays the price submitted by the highest bidder. Do you agree? Explain.
Two parties, Juan and Ben, have been negotiating the purchase by Ben of Juan's car. Juan receives a new and higher bid for his car from Adriana. How might Adriana's bid change Juan and Ben's threat values? The threat values are unchanged. Juan now values the car at the price of Adriana's bid, her bid is his opportunity cost of selling the car to Ben, and that opportunity cost is Juan's new threat value. Juan's new threat value is the product of the difference between Ben and Adriana's offers and the probability the car will be sold to Adriana. Juan's threat value is unchanged, but Ben has to consider his new opportunity cost
When a famous painting becomes available for sale, it is often known which museum or collector will be the likely winner. Yet, the auctioneer actively woos representatives of other museums that have no chance of winning to attend anyway. Suppose a piece of art has recently become available for sale and will be auctioned off to the highest bidder, with the winner paying an amount equal to the second highest bid. Assume that most collectors know that Valerie places a value of $15,000 on the art piece and that she values this art piece more than any other collector. Suppose that if no one else shows up, Valerie simply bids $15,000/2=$7,500 and wins the piece of art. The expected price paid by Valerie, with no other bidders present, is $________.. Suppose the owner of the artwork manages to recruit another bidder, Antonio, to the auction. Antonio is known to value the art piece at $12,000. The expected price paid by Valerie, given the presence of the second bidder Antonio, is $_______. .
Sophia is a contestant on a game show and has selected the prize that lies behind door number 3.The show’s host tells her that there is a 50% chance that there is a $15,000 diamond ring behindthe door and a 50% chance that there is a goat behind the door (which is worth nothing to Sophia,who is allergic to goats). Before the door is opened, someone in the audience shouts, “I will giveyou the option of selling me what is behind the door for $8,000 if you will pay me $4,500 for thisoption.” [Assume that the game show allows this offer.]a. If Sophia cares only about the expected dollar values of various outcomes, will she buythis option?b. Explain why Sophia’s degree of risk aversion might affect her willingness to buy thisoption
Suppose Kenji is willing to pay a total of $180,000 for an antique car. True or False: Keeping his maximum willingness to pay for an antique car in mind, Kenji will buy the antique car because it would be worth more to him than its market price of $225,000. True False
A seller sells a good of quality q at a price t. The cost of producing at quality level q is given by q2/2. There is a buyer who receives a utility of Xq − t by consuming the unit of quality q at price t. If he decides not to buy, he gets a utility of zero. X can take two values X1 = 1 and X2 = 4. (a) Suppose the seller can observe X. Derive the profit maximizing price-quality pairs offered when the type is X1 = 1 and when the type is X2 = 4. (b) Show that the full information price-quality pairs are not incentive compatible if the seller cannot observe X.
If there is only one buyer and one seller meeting to exchange, then any price that they agree upon must be between the willingness to pay of the buyer and the willingness to sell of the seller.True or False
Two players play the Ultimatum Game, in which they are to split $20. A purely rational agent would only reject an offer of … Group of answer choices... -$20 -$19 -$1 -$0 -$10
In this version of the ultimatum game experiment, one participant is given £100, and is told to offer to split that amount with another participant. The second player can either refuse to accept the division, in which case the participant receiving the £100 has to give it back, or can accept the division, in which case, the player receiving the money splits the £100 as proposed. For the participant who has to accept or reject the offer A) The best strategy is to accept any offer which meets the social norm for fairness. B) The best strategy is to threaten to turn down any transfer of less than £100 to ensure that the person receiving the money makes a fair offer. C) There is a dominant strategy to accept any offer because gaining some money is better than gaining no money D) There is a dominant strategy to turn down any offer other than £50 because an unequal split would be unfair.
There is a city, which looks like chopped isosceles triangle, as shown below. Citizens live uniformly distributed all over the city. Two ice-cream vendors, A and B, must independently set up stores in the city. Each citizen buys from the vendor closest to their location and when equidistant from both vendors they choose by coin toss. Each vendor’s aim is to maximize the expected number of customers. A choice of location by the two vendors is a Nash equilibrium if no vendor can do better by deviating unilaterally. Does this game have a Nash equilibrium? If so, describe it. If not, explain why not
**Practice*** Amy and Bob are playing the following board game:(I) Amy starts. She has three possible actions: Pass, Attack, or Defend.(II) Bob observes what Amy chose, and then chooses between three actions with the same names: Pass, Attack, or Defend.(III) If either player passes, or one attacks and the other defends, then the game ends. But if either both players attack, or if both players defend, then Amy has to choose between two actions: Respond or Not Respond. The payoffs are as follows:- If both players pass, both players get a payoff of 0.- If a player attacks and the other player defends, the player that attacks gets a payoff of 1, while the player that defended gets a payoff of 2.- If a player passes but the other player attacks or defends, the player who passes gets a payoff of -1, and the player who attacked or defended gets a payoff of 3.- If both players attack or both players defend:– If Amy responds, she gets a payoff of 4, and Bob gets a payoff of 0.– If Amy does…