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Title: Sarah makes giant wind chime sculptures for a living. When she makes 4 sculptures, she earns $10,000 Post by: Cuba on Jun 18, 2015 Sarah makes giant wind chime sculptures for a living. When she makes 4 sculptures, she earns $10,000. When the makes 5 sculptures, she earns $12,500. Next door, Gilbert runs a meditation clinic. When Sarah makes 4 giant wind chime sculptures, the noise from the sculptures does not disrupt his patients, and he earns $7,500. When Sarah makes 5 sculptures, the noise is disruptive and Gilbert's profits fall to $6,000. The city has an ordinance which prohibits noise that disrupts the community.
a. If bargaining between Sarah and Gilbert requires an enforceable contract to be drawn up at a cost of $1,500, how many sculptures will Sarah make? Explain how you arrived at your answer. b. Is the outcome in part a an outcome that the benevolent social planner would endorse? Why or why not? Title: Re: Sarah makes giant wind chime sculptures for a living. When she makes 4 sculptures, she earns $10 Post by: IloveChi on Aug 27, 2015 Content hidden
Title: Re: Sarah makes giant wind chime sculptures for a living. When she makes 4 sculptures, she earns $10,000 Post by: Cuba on Aug 31, 2015 Exactly what I needed, thanks a million.
Title: Re: Sarah makes giant wind chime sculptures for a living. When she makes 4 sculptures, she earns $10,000 Post by: IloveChi on Aug 31, 2015 You're welcome.
Feels nice to be right :p |