Purchasing value is the highest sum that you are ready to disburse for the book. The buyer is faced with choosing amidst the dual alternatives, which are either to purchase or not to purchase the textbook. The textbook will only be purchased if it is going to of great benefits to the buyer. Buyer would prefer not to purchase the book totally if the cost of the book is at $20.
Selling cost is the minimum sum that you are ready to allocate to definite worth of the book. The seller is solely faced with two alternatives; to either dispose the book or not to dispose. The higher the cost of disposing the book then more profit is gained Seller would prefer not totally disposing the book if the purchaser present $5 or less since disposing the book at that cost would result to incurring massive loss. Seller and buyer must thus agreed on better prices in order to transact.
The price that is acceptable for both the seller and the buyer is known as equilibrium while the quantity that will be disposed will be called equilibrium quantity.
For the market to get equilibrium faster, the seller is supposed to ask for a price that is not too high. The buyer on the other hand should be willing to offer a price that is not too low for the seller to accept.
Preparing for Taxes and Welfare Experiment
High taxes that are imposed on buyers normally reduce the quantity of commodities that the buyer can afford. The taxes that are normally imposed on the sellers make them sell lower quantity of commodity.
High taxes make the prices of the commodity be expensive while lower taxes on the commodities makes the prices to be affordable. Government is the chief regulator of taxes on every commodity.
Government normally imposed numerous taxes namely income and exercise tax. Government on employees, companies, wholesalers and corporations, can impose taxes. The prevailing government collects taxes in order to provide services to her citizen. The deduction of taxes is granted judicial system that is judged with the duty of protection of the citizens. The judicial system is mainly concern with the personal safety and in the enforcement of contracts. Taxes are normally the chief revenue to the government which is utilized in paying of the different kind of services.
Government is expected to utilize the taxes they collect wisely with lot of transparency and accountability. High rate of taxes on the commodities make them unaffordable, which is then passed, to the buyers to bear. The prices of the chemistry book will be expensive when high amount of tax is imposed on it. Conversely, the prices of the chemistry book are expected to be affordable for students in case lower taxes are imposed on it. Sellers who imposed high amount of taxes normally sell less compared to sellers who impose fewer taxes on their commodities sells more commodities.
Auctioning of the license is normally sold to the highest bidders.
Taxes drive a wedge between buyers and sellers. Sellers will only be willing to supply if they get tax from the buyers hence shifting the supply curve upward by an amount equal to the tax and vice versa is true about the buyers.
Preparing for the Asymmetric Information and the Market for Lemons Experiment
High quality MP3 will sell at higher prices while low quality MP3 will sell at low prices. High quality MP3 normally results to profit to the sellers since they normally fetch higher prices. Low quality MP3 normally stagnate within the prevailing market because of their poor quality thus selling at very low prices, which eventually result to massive losses.
Buyer will only purchase MP3, which are have a high quality and are sold at affordable prices. MP3 which possesses batteries the take longer are likely to be sold that the MP3 that possesses short lasting batteries. Purchasers are likely to purchase more MP3, which are of high quality player so long as it is of high quality; whereas sellers normally dispose MP3 that are manufactured to order. This is normally carried out via advertising their respective parts from the prevailing distributors accompanied by the production of such MP3.
Selling is normally made in terms of every player where each seller has the choice of manufacturing the high quality player. Conversely, buyer will be more than willing to purchase MP3 player of high quality. The difference amidst the cost of the player and the buying is normally computed by finding their difference. Buyers normally remind sellers to remit taxes.
The market works well when there is information available but if there were no information, the will not work well since the prices will go up because people want to make high profits. People with low quality will increase the prices as well as the once with the high quality.
People normally have to choose amidst fishing and hunting. When there is much fish in the prevailing river they tend to fish more than hunting hence they get more protein. People can normally fish at will so long as there no regulation in fishing.
Government can regulate the number of people to fish via issuing of the license for fishing thus protecting fishery. These licenses are normally given at the commencement of every year. Licenses that grant monthly fishing in the existing bodies by the prevailing lottery at the commencement of every year.
Licenses are also disposed via auctioning at the commencement of every month. The first log on box represents free will of fishing. At the commencement of every month, lotteries are imposed, to determine who gets the quality fish.
The regulation put by the licenses out the fishing at sustainable levels since if there were no regulations, people will fish unsustainably since every one needs proteins.
Comparison amongst the above markets
In equilibrium, market forces of demand normally dictate the prices of goods, services while in taxes, and welfare experiment prices of the commodity are dependent on the amount of tax imposed by the purchaser and the seller.
Fishing and hunting is also dependent on the regulations that would be imposed by the government as pertaining to fishing while, in lemon market, the prices is determined by the quality of the products.
The market of the MP3 is dictated by the quality of the MP3. The higher the quality of the MP3 the more the customers will buy the MP3 and vice versa is true. The prices of the MP3 also have an effect on the sales made on the MP3. Customers will buy high quality MP3 which are sold at a low price.
The tax that is imposed on a commodity affects price of that commodity. If the tax imposed on the commodity is high, then the prices of that commodity will be high. On the other hand, if the tax on the commodity is low price will be low.
Purchasing value is determined by the sum that the buyer will be capable and willing to disburse for the book while the selling price will be determined by the sum that the seller will be willing to allocate to the cost of the book.
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