Transcript Oct5

What is the lowest hourly wage at
which you would be willing to spend
10 hours per week at a retail sales job
during the school year?
A demander with Buyer Value $50
buys an object from a supplier with
Seller Cost $20. The sum of the
buyer’s and the seller’s profit :
A. depends on the price. Higher
price means larger sum.
B. is the same at all prices
between $20 and $50.
C. depends on the price. Lower
price means smaller sum.
D. None of the above.
Why is that?
• Buyer’s profit=BV-Price
• Seller’s Profit =Price –SC
• Buyers Profit +Seller’s profit=
(BV-Price)+(Price-SC)=BV-SC
So sum of buyer’s and seller profit is BV-SC
regardless of price.
iPod Demand Curve
price
$450
$400
$350
$300
$250
$200
$150
$100
$50
$0
0
50
100
150
200
250
quantity
iPhone Demand Curve
Price
$1,600
$1,400
$1,200
$1,000
$800
Series1
$600
$400
$200
$0
0
50
100
150
200
250
300
350
Quantity
Homework exercise
• Results of surveys are posted in Excel file
• Use this information to answer questions
posed there.
• Write down your answer. We will ask for
answers with clickers next week.
And on to our main lecture…