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For figure 8-9 (buyers transaction costs are reduced by an outsider), demand with zero transaction costs is Q1D = 50 - P and supply is Qs = -7 +2P...

For figure 8-9 (buyers transaction costs are reduced by an outsider), demand with zero transaction costs is Q1D = 50 - P and supply is Qs = -7 +2P (P=price:$).
a.Verify all of the prices and quantities calculated in the discussion.
b.Now assume that intermediaries come from a competitive market with an equilibrium price of $8 per unit for their services, that is , any buyer or seller who wants an intermediary's services must pay intermediares if hiring them saves buyers $8 in transaction costs.?
c. does your answer to a. change if buyers pay $8 per unit to the intermediary but sellers offer to rebate part of that expense to buyers?

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Economics - 8203990.doc

For figure 8-9 (buyers transaction costs are reduced by an outsider), demand with zero transaction
costs
is
Q1D
=
50
P
and
supply
is
Qs
=
-7
+2P
(P=price:$).
a.Verify
all
of
the
prices
and...

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