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Author Question: The economic value which can be created by a transaction between two people, Ed (seller) and Luis ... (Read 22 times)

fbq8i

  • Hero Member
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  • Posts: 527
on: Jun 30, 2018
The economic value which can be created by a transaction between two people, Ed (seller) and Luis (buyer), is 50 as Ed's opportunity cost of selling is 135 and Luis' valuation of the good is 185 . Suppose Ed and Luis do not speak the same language and Ed hires an interpreter who charges 2 per hour. Ed and Luis finally agree to a price of 160 . This implies:
 a. Luis' valuation of the good will increase.
  b. Ed's opportunity cost will decline.
  c. economic value from the transaction will decline.
  d. Ed will receive to a lower benefit than Luis.

Question 2

As the output produced by a firm increases, the average fixed cost:
 a. continues to decline.
  b. initially increases, and then declines.
  c. quickly drops to zero.
  d. becomes constant.
  e. declines and finally becomes negative.


bpool94

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Reply #1 on: Jun 30, 2018
Answer to Question 1

D

Answer to Question 2

a


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