EBK MICROECONOMICS
2nd Edition
ISBN: 8220103679701
Author: List
Publisher: YUZU
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Question
Chapter 17, Problem 1P
To determine
The highest amount a buyer is willing to offer to purchase a house.
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BPO Services is in the business of digitizing information from forms that are filled out by hand. In 2006, a big client gave BPO a distribution of the forms that it digitized in house last year, and BPO estimated how much it would cost to digitize each form.
Form Type
Mix of Forms
Form Cost
A
0.5
$3.00
B
0.5
$1.00
The expected cost of digitizing a form is
.
Suppose the client and BPO agree to a deal, whereby the client pays BPO to digitize forms. The price of each form processed is equal to the expected cost of the form that you calculated in the previous part of the problem.
Suppose that after the agreement, the client sends only forms of type A.
The expected digitization cost per form of the forms sent by the client is
. This leads to an expected loss of
per form for BPO. (Hint: Do not round your answers. Enter the loss as a positive number.)
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.
Suppose research at Panasonic reveals that prospective buyers are anxious about buying high definition television sets. What strategies might you recommend to the company to reduce consumer anxiety
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