You have just purchased a new Ford Taurus for $20,000, but the most you could get for it if you sold it privately is $15,000. Now you learn that Toyota is offering its Camry, which normally sells for $25,000, at a special sale price of $20,000. If you had known before buying the Taurus that you could buy a Camry at the same price, you would have definitely chosen the Camry. True or false: From what we are told of your preferences, it follows that if you are a rational utility maximizer, you should definitely not sell the Taurus and buy the Camry. Explain.
Answer to relevant QuestionsWhat is the difference between “scarcity” and “shortage”?Assume that tea and lemons are complements and that coffee and tea are substitutes. a. How, if at all, will the imposition of an effective ceiling price on tea affect the price of lemons? Explain. b. How, if at all, will the ...Suppose demand is P = 600 - Q and supply is P = Q in the soybean market, where Q is tons of soybeans per year. The government sets a price support at P = $500/ton and purchases any excess supply at this price. In response, ...President Reagan negotiated a “voluntary” import quota on Japanese cars sold in the United States in the early 1980s. Some of his advisers had recommended that he impose a higher import tax (tariff) instead. Assuming the ...Same as Problem 1, except now the price for every pound after 10 lb/wk is $4/ lb.
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