Three qualities of second-hand bicycles are available in equal numbers: high, medium, and low. There are many buyers and sellers, who value each quality of the bike differently. The value that each agent assigns to each quality of the bike is given below. Quality Buyer's value Seller's value High Medium 100 75 65 60 Low 30 45 (i) What is the efficient outcome in this market? Equivalently, which types of bikes should change their owners to maximise the social welfare?

Three qualities of second-hand bicycles are available in equal numbers: high, medium, and low. There are many buyers and sellers, who value each quality of the bike differently. The value that each agent assigns to each quality of the bike is given below. Quality Buyer's value Seller's value High Medium 100 75 65 60 Low 30 45 (i) What is the efficient outcome in this market? Equivalently, which types of bikes should change their owners to maximise the social welfare?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter6: Consumer Choices

Section: Chapter Questions

Problem 13CTQ: Think back to a purchase that you made recently. How would you describe your thinking before you...

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