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Welcome to the Q&A for ECN/APEC 2010, where you can ask questions and receive answers from your fellow students, the TA, and your professor.

Please only ask questions about the material for the course. Try to create discussions about the material we see in class, instead of just thinking of economics in general (this is an introduction to microeconomics class, not a policy or government class).

For questions and discussions about course organization or other course related topics, come see us after class or during office hours.

Feel free to discuss quiz questions on the Q&A, but do not provide direct answers to quiz questions before the quiz's due date.

Question on practice 8.

–1 vote
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Consider the following willignesses to sell among 8 sellers, each of whom can sell either 1 or 0 unit of the good:

Buyers12345678
WTS$5$10$15$20$25$30$35$40

Suppose that there is a price floor of $30 and that at that price, buyers are willing to buy 3 units of the good.

If there is a surplus, the good is sold by the sellers who waste the most money into improving the quality of the good.

What will be the value wasted in quality improvements by the sellers who get to sell the good(sellers who end up selling waste just enoughmoney in quality improvement to deter any other seller from wasting more)?

asked Apr 29 by canvas-2beaa592712eb (175 points)

1 Answer

0 votes
If there is a $30 floor in place all sellers who have products that value less than $30 must improve their goods in order to sell them. However, these sellers do not want to waist more money improving their goods than they are able to sell them for. the correct answer is $10 because out of all of the goods that value less than $30 the good that values $20 is the one that the seller would waist just enough money improving to be able to make a profit when sold at $30.
answered Apr 30 by canvas-9dad53739df91 (261 points)
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