What is the maximum per unit that sellers are willing to pay

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Reference no: EM13188842

demand with zero transaction costs is Q( to the 1st power)D= 50-P and supply is Qs=-7+ 2P.

a. Verify all the prices and quantities calculated in the discussion.

b. Now assume that intermediaries come from a competitive market with and equilibrium price of $8 per unit for their services, that is, any buyer or seller who wants an intermediary's services must pay $8 for them. What is the maximum per unit that sellers are willing to pay intermediaries if hiring them saves buyers $8 in transaction costs?

c. Does your answer to Question 16a change if buyers pay $8 per unit to the intermediary but sellers offer to rebate part of that expense to buyers

Reference no: EM13188842

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