Discussion board assignment 

Discussion board assignment 

Read and consider the “Willingness to Pay” example in Section 7-1 (Chapter 7 Section 1)

Everyone shops for things they need for themselves and for gifts for others. Imagine you are taking an online class and you are looking to buy a new computer because your old one died. Class starts in two days.  The market for computers is very competitive. There are several brands that have similar characteristics such as storage capacity, processor speed, number of USB ports, etc. but you have owned one that you liked and you want to buy that same brand, the X-Mark.

You have a budget of $1,000. One popular store has the brand you like on sale for $850 because other stores are selling them for that price. You have a friend at that store who tells you that the store paid $700 for that computer.

Please evaluate and explain the willingness to pay, consumer surplus, demand, producer surplus, cost, and willingness to sell of this transaction. Define these terms in your explanation, not as separate definitions. Incorporate the meaning into your narrative so that you write a convincing story.

resource

Section 7-1 (Chapter 7 Section 1)

7-1aWillingness to Pay

Imagine that you own a mint-condition recording of Elvis Presley’s first album. Because you are not an Elvis Presley fan, you decide to sell it. One way to do so is to hold an auction.

Four Elvis fans show up for your auction: Taylor, Carrie, Rihanna, and Gaga. They would all like to own the album, but each of them has a limit on the amount she is willing to pay for it. Table 1 shows the maximum price that each of the four possible buyers would pay. A buyer’s maximum is called her willingness to pay, and it measures how much that buyer values the good. Each buyer would be eager to buy the album at a price less than her willingness to pay, and each would refuse to buy the album at a price greater than her willingness to pay. At a price equal to her willingness to pay, the buyer would be indifferent about buying the good: If the price is exactly the same as the value she places on the album, she would be equally happy buying it or keeping her money.

Table 1Four Possible Buyers’ Willingness to PayBuyerWillingness to PayTaylor$100Carrie80Rihanna70Gaga50

To sell your album, you begin the bidding process at a low price, say, . Because all four buyers are willing to pay much more, the price rises quickly. The bidding stops when Taylor bids  (or slightly more). At this point, Carrie, Rihanna, and Gaga have all dropped out of the bidding because they are unwilling to offer any more than . Taylor pays you  and gets the album. Note that the album has gone to the buyer who values it most.

What benefit does Taylor receive from buying the Elvis Presley album? In a sense, Taylor has found a real bargain: She is willing to pay  for the album but pays only . We say that Taylor receives consumer surplus of . Consumer surplus is the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it.

Consumer surplus measures the benefit buyers receive from participating in a market. In this example, Taylor receives a  benefit from participating in the auction because she pays only  for a good she values at . Carrie, Rihanna, and Gaga get no consumer surplus from participating in the auction because they left without the album and without paying anything.

Now consider a somewhat different example. Suppose that you had two identical Elvis Presley albums to sell. Again, you auction them off to the four possible buyers. To keep things simple, we assume that both albums are to be sold for the same price and that no one is interested in buying more than one album. Therefore, the price rises until two buyers are left.

In this case, the bidding stops when Taylor and Carrie bid  (or slightly higher). At this price, Taylor and Carrie are each happy to buy an album, and Rihanna and Gaga are not willing to bid any higher. Taylor and Carrie each receive consumer surplus equal to her willingness to pay minus the price. Taylor’s consumer surplus is , and Carrie’s is . Taylor’s consumer surplus is higher now than in the previous example because she gets the same album but pays less for it. The total consumer surplus in the market is .

Get best place to buy research papers from homework market

Homeworkmarket
Calculate your paper price
Pages (550 words)
Approximate price: -

Why Homework Market

HomeworkMarket

Quality Researched Papers

We always make sure that writers follow all your instructions precisely. You can choose your academic level: high school, college/university or professional, and we will assign a writer who has a respective degree.

Homework Market

Qualified Writers

We have hired a team of professional writers experienced in academic and business writing. Most of them are native speakers and PhD holders able to take care of any assignment you need help with.

HomeworkMarket

Unlimited Revision

If you think we missed something, send your order for a free revision. You have 10 days to submit the order for review after you have received the final document. You can do this yourself after logging into your personal account.

HomeworkMarket

Timely Delivery

All papers are always delivered on time. In case we need more time to master your paper, we may contact you regarding the deadline extension. We will always strive to deliver on time.

HomeworkMarket

Original & Confidential

We use several writing tools checks to ensure that all documents you receive are free from plagiarism. Our editors carefully review all quotations in the text.

HomeworkMarket

Customer Support 24/7

Our support agents are available 24 hours a day 7 days a week and committed to providing you with the best customer experience. Get in touch whenever you need any assistance.

Try it now!

Calculate the price of your order

Total price:
$0.00

How it works?

Follow these simple steps to get your paper done

Homework Market

Place your order

Fill in the order form and provide all details of your assignment.

Homework Market

Proceed with the payment

Choose the payment system that suits you most.

Homework Market

Receive the final file

Once your paper is ready, we will email it to you.

Homework Market Writing Services

No need to work on essay at night. Sleep tight, we will cover your back. We offer all kinds of essay writing services.

HomeworkMarket HomeworkMrket

Essays

Essay Writing Services

No matter what kind of academic paper you need and how urgent you need it, you are welcome to choose your academic level and the type of your paper at an affordable price. We take care of all your paper needs and give a 24/7 customer care support system.

HomeworkMarket HomeworkMarket

Admissions

Admission Essays

An admission essay is an essay or other written statement by a candidate, often a potential student enrolling in a college, university, or graduate school. You can be rest assurred that through our service we will write the best admission essay for you.

HomeworkMarket HomeworkMarket

Editing

Essay Editing

Our academic writers and editors make the necessary changes to your paper so that it is polished. We also format your document by correctly quoting the sources and creating reference lists in the formats APA, Harvard, MLA, Chicago / Turabian.

HomeworkMarket HomeworkMarket

Research Paper

Research Paper

If you think your paper could be improved, you can request a review. In this case, your paper will be checked by the writer or assigned to an editor. You can use this option as many times as you see fit. This is free because we want you to be completely satisfied.