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Quiz2Answers - Suppose that instead eBay imposed a fee of...

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Economics 20A Winter 2008 Answers to Quiz #2 1. Consider the figure below . At what price ($15, $20, $25, $30, or $35) would there be an excess demand amounting to 200 units of the good? ANSWER: At a price of 20 the quantity demanded is 500 and the quantity supplied is 300, and so excess demand is 200. 2. Suppose that when eBay imposes a fee on sellers of $10 per unit sold, in equilibrium a buyer pays the seller $50 per unit. (That means that, after paying the fee, the seller gets $40 per unit).
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Unformatted text preview: Suppose that instead eBay imposed a fee of $3 per unit on the seller, and a fee of $7 per unit on the buyer. How much would the buyer pay the seller? ANSWER: How the $10 fee is split between the buyer and the seller has no effect on the effective price the consumer pays. So if the fee the buyer pays eBay is $7, then in equilibrium the price the buyer pays in total must remain at $50; therefore the amount the buyer pays the seller is $50-$7=$43....
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