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A hypothetical per-trip levy applies to rides used by students returning from a campus event. Supply is much less elastic than demand. Which group bears most of the economic burden?
What is the efficient number of bales of hay for Jack to cut?
If the most that Jack could earn elsewhere is zero, what is the minimum that MacDonald would have to pay Jack to get him to work the efficient amount?
What is MacDonald's net profit?
If all the cars that are worth more than $X are appraised and all the cars that are worth less than $X are sold without appraisal, then if your car is worth $X, how much money would you get if you sold it without having it appraised?
In equilibrium, what will be the total net revenue of all owners of used cars, after Rod's Garage has been paid for its appraisals?
If all the cars that are worth more than $X are appraised and all the cars that are worth less than $X are sold without appraisal, what will the market price of unappraised used cars be? (Hint: What is the expected value of a random draw from the set of cars worth less than $X?)
If nobody had their car appraised, what would be the total revenue received by used-car owners for their cars?
In equilibrium, there will be a car of marginal quality such that all cars better than this car will be appraised and all cars worse than this car will be sold without being appraised. The owner of this car will be just indifferent between selling his car unappraised and having it appraised. What will be the value of this marginal car?
In equilibrium, how many cars will be sold unappraised?