Three buyers want to purchase a used fridge. Their willingness-to-pay for a fridge is: • Frankie $100 Myles $71 • Romesh $49 Two sellers would like to sell a used fridge. Their valuations for their fridges are: • Sarah $30 Sophie $56 What is the lowest feasible price for a used fridge? (Omit the dollar sign in your answer.)

Three buyers want to purchase a used fridge. Their willingness-to-pay for a fridge is: • Frankie $100 Myles $71 • Romesh $49 Two sellers would like to sell a used fridge. Their valuations for their fridges are: • Sarah $30 Sophie $56 What is the lowest feasible price for a used fridge? (Omit the dollar sign in your answer.)

Economics Today and Tomorrow, Student Edition

1st Edition

ISBN:9780078747663

Author:McGraw-Hill

Publisher:McGraw-Hill

Chapter7: Demand And Supply

Section: Chapter Questions

Problem 16AA

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Assume you have your car broken down just before the weekend. You value your weekend trip as muchas v and if you have to stay home you get the zero utility. There are two dealerships in your town. Atthe beginning of the day they simultaneously choose a price for repair. Dealers know that when you cometo one of them and observe the price, you can always call to another dealer to make an inquiry about hisprice. The call is costless. The other dealer, however, can be occupied for this day. Assume, this happenswith probability which is a common knowledge (but the dealers do not know whether the other dealer isoccupied or not). Assume zero repair cost for the dealer and find a symmetric equilibrium of the game.
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