Microeconomics (2nd Edition) (Pearson Series in Economics)
2nd Edition
ISBN: 9780134492049
Author: Daron Acemoglu, David Laibson, John List
Publisher: PEARSON
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Question
Chapter 9, Problem 4P
(a)
To determine
The individual
(b)
To determine
The overall demand curve for both the individuals if paintings are private goods.
(c)
To determine
The new social benefit curve if paintings are public goods.
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You must allocate the 70,000 seats in Reliant Stadium (in Houston) among Texan (Houston) and Cowboy
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Consider the market for CD players, illustrated in the figure to the right. Suppose there are network
externalities in this market such that the quantity of a good demanded grows in response to the
growth of purchases by other individuals (as indicated by the demand curve "Demand" in
the figure). Suppose that the price is initially $110 where the quantity demanded is 90 (thousand
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If the price of CD players falls to $50, demand will increase to thousand CD players per month.
(Enter your response using an integer.)
of this increase, thousand units of the 90 thousand-unit increase is the pure price effect and
thousand units of the increase is the bandwagon effect.
The bandwagon effect causes the demand for CD players to be more
otherwise be the case (without network externalities).
▼than would
200-
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160 Demand
140
120-
100-
80-
60-
40-
20-
0+
0
Deo
20
D150
D80 P120 P180
40 60 80 100 120 140 160 180 200 220
CD Players (thousands per month)
Q
Next
Consider the market for CD players, illustrated in the figure to the right. Suppose
there are network externalities in this market such that the quantity of a good
demanded grows in response to the growth of purchases by other individuals (as
indicated by the demand curve "Demand" in the figure). Suppose that the price is
initially $90 where the quantity demanded is 120 (thousand CD players
per month).
If the price of CD players falls to $50, demand will increase to 180 thousand CD
players per month. (Enter your response using an integer.)
Of this increase,
price effect and
thousand units of the 60 thousand-unit increase is the pure
thousand units of the increase is the bandwagon effect.
C
Price
200-
180-
160-
140-
120+
100-
80-
60-
40-
20-
0+
0
Doo
Demand
20
P150
D60 P120 180
40 60 80 100 120 140 160 180 200 220
CD Players (thousands per month)
Chapter 9 Solutions
Microeconomics (2nd Edition) (Pearson Series in Economics)
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