You and your friend go out shopping for television sets for your respective apartments. You find the one you want to buy and pay extra money to have it delivered during the weekend. Your friend is unwilling to pay extra and will wait for the television to be delivered as per the store's usual practice. Which of the following conclusions can be drawn from this information?
a. You have a higher price elasticity of demand for the TV than your friend.
b. Your opportunity cost of time is higher and than your friend's.
c. Your friend's opportunity cost of time is higher than your's.
d. Both of you have the same price elasticity of demand for the TV.
Question 2
Suppose you inherit the only spring of mineral water in an area and want to maximize profits from this costless product. You would ask your customers to bring their containers with them and:
a. charge them the highest price possible to sell some output.
b. charge them the lowest price possible to sell as much as you can.
c. ask them how much they would like to pay and accept it.
d. charge the price at which MR is zero.
e. charge the price at which MR is maximum.
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