Scenario: the Table Below Shows the Reservation Values of Ten

question 78

Multiple Choice

Scenario: The table below shows the reservation values of ten buyers and a seller for a loaf of bread. Each buyer would buy at most one loaf and the seller can make up to ten loaves. Initially trades happen under the market mechanism with each agent making a decision according to the market price and his or her own reservation value. Then the government imposes a price ceiling of $1.00 per unit.

-Refer to the scenario above.Suppose that,after the price ceiling is imposed,the government inspector extorts a bribe of $1.00 per loaf from the seller so the seller can sell each loaf at the market price while the inspector looks the other way.What percentage of the cost of bribing can the seller pass on to the buyers? (Hint: The bribe is just like a tax.)

• A) 0 percent
• B) 25 percent
• C) 50 percent
• D) 75 percent

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Definitions:

Negative Stereotypes

Preconceived and oversimplified beliefs about a particular group of people or things that are mostly unfavorable and can lead to discrimination.

Psychological Effects

The mental and emotional impacts or changes that occur in response to an external stimulus.

Attributional Ambiguity

The uncertainty faced by members of stigmatized groups about whether the treatment they receive is due to their personal characteristics or their group membership.

Negative Feelings

Unpleasant or undesirable emotions such as sadness, anger, or fear.