Question 1

The amount of uncaptured consumer surplus when information is digital exceeds the amount of uncaptured surplus when information is printed

Accepted Answer

Digital information can be more easily customized, distributed, and accessed, leading to a greater potential for capturing consumer surplus through personalized offerings and pricing strategies, thus leaving less uncaptured surplus compared to printed information, which is less flexible.

Question 2

An increase in journal photocopying  --------------- library's value and hence funding, which in turn allows journal publishers to increase subscription fees.

Accepted Answer

An increase in journal photocopying indicates a higher demand or usage of the journals, which can be interpreted as an increase in the library's value. This perceived value can lead to increased funding for the library. With more resources, libraries may be more willing or able to afford higher subscription fees, which can encourage journal publishers to increase their fees.

Question 3

Selling to libraries yields a higher profit to the publisher than selling directly to readers when:

Accepted Answer

When readers do not place a high value on owning the book, they are more likely to borrow from libraries, increasing library purchases and thus profits for the publisher.

Question 4

The profit level of a bank declines when it makes its ATMs available for the customers of a competing bank.

Accepted Answer

When a bank allows customers of a competing bank to use its ATMs, it incurs additional costs for maintenance and cash replenishment, while the fees collected from the competing bank's customers may not fully offset these expenses, potentially leading to a decline in profit levels.

Quiz 2: Various Economic and Issues

The amount of uncaptured consumer surplus when information is digital exceeds the amount of uncaptured surplus when information is printed

An increase in journal photocopying --------------- library's value and hence funding, which in turn allows journal publishers to increase subscription fees.

Selling to libraries yields a higher profit to the publisher than selling directly to readers when:

The profit level of a bank declines when it makes its ATMs available for the customers of a competing bank.