Chapter 8 For figure 8-9, demand with zero transactions costs is Q1D = 50 – P and supply is Qs = -7 +2P. Verify all of the prices and quantities calculated in the discussion. Now assume that intermediaries come from competitive market with an equilibrium price of $8 per unit for their services, that is, any buyer or seller who wants an intermediary’s services must pay $8 for them. What is the maximum per unit that sellers are willing to pay intermediaries if hiring them saves $8 transaction costs? Does your answer to question 2A change if buyers pay $8 per unit to the intermediary but sellers offer to rebate part of that expense to buyers? Chapter 9 What are the highest and lowest payments from the writer that the beekeeper farmer team will accept for the sixth day? Assuming that the farmer can dispose of the $7 from the writer as she wishes, what range of payments will the beekeeper accept? Assuming that the beekeeper gets that amount, what range of payments will the farmer accept? (Remember that negative payments are also possible.) Answer the same questions for the fifth day. Some fields have large enough quantities of both oil and natural gas that coordinator must be achieved for the production of both, rather oil alone as in our examples. Will fields with both oil and gas have greater difficulties in unitization than fields with oil or gas alone? Explain (Hint: look closely at figure 9-2).
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