Answer to Question #125615 in Microeconomics for ismail.lodin

Question

a) Let a doctor earns $20 per hour, a plumber $ 5 per hour, and a professor $ 10 per hour.
Everything else the same, which one will devote more hours to negotiating the price of a
new car? Explain

Answer 1

The time value is different for the three individuals. The doctor values their time at 20$ per hour, the plumber at 5$ per hour, and the professor at 10$ per hour. That implies that the more time an individual spends on negotiations, the more the loss they incur regarding money earned. So, the plumber who attains the lowest will spend maximum time negotiating as his time is well worthless to him compared to the others.