Economics (7th Edition) (What's New in Economics)
7th Edition
ISBN: 9780134738321
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
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Chapter 10, Problem 10.4.5PA
To determine
Endowment effect.
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Question 10
Which of the following startements about network externalities is CORRECT?
Air pollution is an example of a network externality.
For a good with network externalities, the number of people who are willing to
buy a unit of the good is uniquely determined by the price.
Network externalities are always positive.
The manufacturer of a new good with network externalities might give away a
free version of the good.
For a good with network externalities, one person's valuation of the good is
always increasing in the number of other people using the good.
You must allocate the 70,000 seats in Reliant Stadium (in Houston) among Texan (Houston) and Cowboy
(Dallas) fans for an upcoming game between the two footfall teams. You can set different prices for
seats in the Dallas and Houston sections of the stadium. Suppose you can obtain $40/ticket from
Houston fans irrespective of the number of seats you allocate to Houston fans. You must drop price in
order to sell more tickets to Dallas fans, however. Let Q be the number of tickets you allocate to Dallas
fans. Assume that the maximum price you can charge for these tickets is given by the following inverse
demand function
P= 80
500
(a) Express the total revenue (on all 70,000 seats) from ticket sales as a function of Q;
(b) Derive the first-order condition of the revenue-maximizing problem (it's a function about Q);
(c) What is the optimal number of seats allocated to Dallas fans?
You are a University student who must live off-campus in the second year. There are two types of one-bedroom apartment where you prefer to live because it is near the campus. One rents for $400 per month and the other $360. According to the University Students’ Housing Bureau 80 percent of apartments in the area consists of the $400 type while the remaining 20 percent are of the $360 type. You need to visit the apartments to discover the rent. Suppose the first apartment you visit cost $400 and the opportunity cost of your visit is $6 per visit.
1. If you are risk neutral person should you visit another apartment or rent the one you have found.2. Suppose you visit another apartment and find out that it rents for $400, should you visit another apartment?
Chapter 10 Solutions
Economics (7th Edition) (What's New in Economics)
Ch. 10.A - Prob. 1RQCh. 10.A - Prob. 2RQCh. 10.A - Prob. 3RQCh. 10.A - Prob. 4PACh. 10.A - Prob. 5PACh. 10.A - Prob. 6PACh. 10.A - Prob. 7PACh. 10.A - Prob. 8PACh. 10.A - Prob. 9PACh. 10.A - Prob. 10PA
Ch. 10.A - Prob. 11PACh. 10.A - Prob. 12PACh. 10.A - Prob. 12PACh. 10 - Prob. 10.1.1RQCh. 10 - Prob. 10.1.2RQCh. 10 - Prob. 10.1.3RQCh. 10 - Prob. 10.1.4RQCh. 10 - Prob. 10.1.5PACh. 10 - Prob. 10.1.6PACh. 10 - Prob. 10.1.7PACh. 10 - Prob. 10.1.8PACh. 10 - Prob. 10.1.9PACh. 10 - Prob. 10.1.10PACh. 10 - Prob. 10.1.11PACh. 10 - Prob. 10.1.12PACh. 10 - Prob. 10.2.1RQCh. 10 - Prob. 10.2.2RQCh. 10 - Prob. 10.2.3RQCh. 10 - Prob. 10.2.4PACh. 10 - Prob. 10.2.5PACh. 10 - Prob. 10.2.6PACh. 10 - Prob. 10.2.7PACh. 10 - Prob. 10.2.8PACh. 10 - Prob. 10.2.9PACh. 10 - Prob. 10.2.10PACh. 10 - Prob. 10.2.11PACh. 10 - Prob. 10.3.1RQCh. 10 - Prob. 10.3.2RQCh. 10 - Prob. 10.3.3RQCh. 10 - Prob. 10.3.4PACh. 10 - Prob. 10.3.5PACh. 10 - Prob. 10.3.6PACh. 10 - Prob. 10.3.7PACh. 10 - Prob. 10.3.8PACh. 10 - Prob. 10.3.9PACh. 10 - Prob. 10.4.1RQCh. 10 - Prob. 10.4.2RQCh. 10 - Prob. 10.4.3RQCh. 10 - Prob. 10.4.4RQCh. 10 - Prob. 10.4.5PACh. 10 - Prob. 10.4.6PACh. 10 - Prob. 10.4.7PACh. 10 - Prob. 10.4.8PACh. 10 - Prob. 10.4.9PACh. 10 - Prob. 10.4.10PACh. 10 - Prob. 10.4.11PACh. 10 - Prob. 10.4.12PACh. 10 - Prob. 10.4.13PACh. 10 - Prob. 10.4.14PACh. 10 - Prob. 10.4.15PACh. 10 - Prob. 10.4.16PACh. 10 - Prob. 10.1CTECh. 10 - Prob. 10.2CTECh. 10 - Prob. 10.3CTE
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