The marginal value schedule for moe and the marginal cost, Ask an Expert

Economics

The marginal value schedule for Moe and the marginal cost schedule for Larry for apples are shown below.

No. of Apples Moe's MV Larry's MC

1 $10 $1

2 7 2

3 5 4

4 3 5

(a) Find a single price that all mutually preferred trades can occur.

(b) What are the gains from trade?

(c) Now suppose a $1.50 per-unit tax is levied on Larry for each unit sold (that raises MC by $1.50). Now find all mutually preferred trades and the trading prices. Is the demander harmed by a tax levied on the supplier? Explain.

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91519776

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