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Interest rate sensitivity can also be understood from another perspective. The total cost of a commodity is not just its price, but also what must be paid to borrow money to purchase that item. With modern views of immediate gratification, it is rare for someone to save to purchase a house, or any other big ticket item, what is more common is to borrow the money, buy the item, and make instalment payments. Thus the interest charges are a part of the total cost of acquiring that big ticket item - as consumer sensitivity to interest rates when buying a house or a car.
The demand schedule for computer chips is given in the table. Price (dollars per chip) Quantity demanded(millions of chips per year) 200
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Determinants of reserve price
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What are the income and cross elasticities of demand? Why might they be useful? Explain.
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True public goods are those goods which can't be provided to one group of consumers, without being provided to any other consumers who desire them. Thus they are "non-excludable."
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