Show how much money the advertiser can save by hiring a click-fraud detective in terms of pC, n, X, and Z. What is the advertiser’s willingness to pay for the detective services? b. Suppose there are 500 advertisers with the following attributes: pC = $5, n = 700, X = 0.2, and Z = 0.8. […]
Government policies affect who gets the scarce water in the western United States and how that water is used. In 2004, farmers in California’s Central Valley paid as little as $10 per acre-foot, while in urban San Jose, California, a water agency shelled out $80 an acre-foot. Price differentials between agricultural and other uses can […]
Ethanol, which is distilled from corn, is blended into gasoline, (allegedly) to burn cleaner and to increase the supply of fuel. Given that ethanol is a close substitute for gasoline, its price in a competitive market would be closely tied to the price of gasoline. However, ethanol usually costs more to make than gasoline, so […]
The government wants to drive the price of soybeans above the equilibrium price p1, to p2. It offers growers a payment of x to reduce their output from Q1 (the equilibrium level) to Q2, which is the quantity demanded by consumers at p2. Show in a figure how large x must be for growers to […]
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