Three individuals have $1000 and identical preferences for gum, g, and cigarettes, s, as measured by the utility function U(g,s) = 10g0.9a0.1. The price of gum is $9 and the price of cigarettes is $12
What is the market surplus/shortage at a price of $12 when the supply of cigarettes is 5? A) There will be a shortage of 3 cigarettes.
B) There will be a surplus of 3 cigarettes.
C) There will be a shortage of 2/3 cigarettes.
D) There will be a surplus of 2/3 cigarettes.
A
You might also like to view...
Assume you have four tickets to a U2 concert. You decide to sell each of them separately on an auction site such as eBay. Your auctions represent
A) price differentiation. B) perfect price discrimination amongst those who bid for your tickets. C) perfect price discrimination amongst all people who buy tickets for the concert. D) an illegal act, subject to state and federal prosecution.
The United States Postal Service is an example of a monopoly created by
a. government franchise. b. copyright. c. control of scarce inputs. d. rent-seeking behavior.