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Microeconomics: Principles & Policy

14th Edition
William J. Baumol + 2 others
Publisher: Cengage Learning
ISBN: 9781337794992

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BuyFindarrow_forward

Microeconomics: Principles & Policy

14th Edition
William J. Baumol + 2 others
Publisher: Cengage Learning
ISBN: 9781337794992
Chapter 4, Problem 2DQ
Textbook Problem
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A bottle of wine you bought 15 years ago for $20 now has a market value of $1,500. Would you sell your bottle at that price or keep it for an important occasion? Would you purchase another bottle of such old wine at that high price?

To determine

To discuss:

The preferences of the consumers.

Explanation of Solution

As per the given information, an individual had bought a bottle of wine 15 years ago for $20 and now it has the market value of $1,500. Consumer decision of either keeping that bottle for important occasion

or selling it depends on his preference.

If the individual is a wine lover, he would love to have that wine bottle for an important occasion, on the other hand, the individual does not like wine then he will prefer to sell wine bottle at the ongoing market price of $1,500.

Purchasing of another bottle of wine at such high price also depends on the consumer preference and satisfaction derived from the consumption of wine...

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