please answer all thanks ! Question 2.Suppose in an experiment, you randomly hand out a chocolate to half of thesubjects in a large group. You then allow the subjects to trade the chocolate.That is, the ones who own the chocolate can sell theirs, and the ones who donot own the chocolate can buy from the others. The chocolates can be sold atany price the buyer and the seller agree upon, irrespective of the price in theshop. 1.2.3.4.Explain why, in the absence of transaction costs, we wouldexpect about half of the chocolates to change hands according to thestandard theory.Suppose that a subject, who received a chocolate in the exper-iment, has the following value function for chocolate and for money:- {√ √v=v(x) =x>01-2√√x x < 0What is the minimum price she is willing to accept to sell her chocolate?Suppose that a subject, who did not receive a chocolate in theexperiment, has the same value function for chocolate and for money:v(x): =S√x-2√√xx>0x<0What is the maximum price she is willing to pay to buy a chocolate?When the experiment is conducted in the lab, you observedthat less than half of the chocolates changed hands. Use your answers toQuestions (2.2) and (2.3) to explain this observation.

Utility refers to the subjective measure of satisfaction, happiness, or benefit that an individual…

Question 2. Suppose in an experiment, you randomly hand out a chocolate to half of the subjects in a large group. You then allow the subjects to trade the chocolate. That is, the ones who own the chocolate can sell theirs, and the ones who do not own the chocolate can buy from the others. The chocolates can be sold at any price the buyer and the seller agree upon, irrespective of the price in the shop.

Question 2. Suppose in an experiment, you randomly hand out a chocolate to half of the subjects in a large group. You then allow the subjects to trade the chocolate. That is, the ones who own the chocolate can sell theirs, and the ones who do not own the chocolate can buy from the others. The chocolates can be sold at any price the buyer and the seller agree upon, irrespective of the price in the shop.

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter22: Frontiers Of Microeconomics

Section: Chapter Questions

Problem 6PA

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