07f101ps1solutions

07f101ps1solutions - 3 In the long run we might expect...

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3 In the long run, we might expect demand to adjust or change in this market where our short run supply curve once shifted. In this example, when Japanase decide to buy recycled cardboard, demand increases from D1 to D2 and the price increases as well from P2 to P3. Question 3 D1 is the demand curve when individuals must pay the price. If the price to the patient is zero, then D1 indicates that patients want quantity Q1. When medical care becomes free, demand becomes D2, so that patients want Q1 regardless of the price charged by the government. Question 4 The intersection is the 50 th highest bid. The question should cause you to think about the construction of a demand curve. At every price the demand curve tells you the number willing to pay at least that amount. Here there are 50 people willing to pay Z7 million pounds OR MORE. This is a special market because Knighthoods are not resalable. Thus the queen can charge each of the 50 highest bidders the amount of their individual bids. In an ordinary competitive market
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This note was uploaded on 07/09/2008 for the course ECO 101 taught by Professor Elizabethc.bogan during the Fall '08 term at Princeton.

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07f101ps1solutions - 3 In the long run we might expect...

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