# What is the lowest hourly wage at

advertisement
```What is the lowest hourly wage at
which you would be willing to spend
10 hours per week at a retail sales job
during the school year?
A demander with Buyer Value \$50
buys an object from a supplier with
Seller Cost \$20. The sum of the
buyer’s and the seller’s profit :
A. depends on the price. Higher
price means larger sum.
B. is the same at all prices
between \$20 and \$50.
C. depends on the price. Lower
price means smaller sum.
D. None of the above.
Why is that?
• Buyer’s profit=BV-Price
• Seller’s Profit =Price –SC
• Buyers Profit +Seller’s profit=
(BV-Price)+(Price-SC)=BV-SC
So sum of buyer’s and seller profit is BV-SC
regardless of price.
iPod Demand Curve
price
\$450
\$400
\$350
\$300
\$250
\$200
\$150
\$100
\$50
\$0
0
50
100
150
200
250
quantity
iPhone Demand Curve
Price
\$1,600
\$1,400
\$1,200
\$1,000
\$800
Series1
\$600
\$400
\$200
\$0
0
50
100
150
200
250
300
350
Quantity
Homework exercise
• Results of surveys are posted in Excel file
• Use this information to answer questions
posed there.
• Write down your answer. We will ask for
answers with clickers next week.
And on to our main lecture…
```