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If this were a third-party-payer market where the consumer pays $2, what is the quantity demanded and what is the price charged by the seller?

A) Quantity demanded: 5 units; Price charged: $2
B) Quantity demanded: 4 units; Price charged: $2.50
C) Quantity demanded: 3 units; Price charged: $2.67
D) Quantity demanded: 2 units; Price charged: $3

1 Answer

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Final answer:

Using the demand equation Qd = 16 - 2P and the consumer payment of $2, the quantity demanded is 12 units. The actual price charged by the seller isn't determined with the given information in the absence of third-party payment specifics.

Step-by-step explanation:

The question pertains to a third-party-payer market situation where the consumer pays a fixed amount, in this case, $2. To determine the quantity demanded, we can use the given demand equation, which is Qd = 16 - 2P, where P is the price.

Plugging in the consumer's payment of $2 into this equation, we get:

Qd = 16 - 2(2), which simplifies to Qd = 16 - 4.

So the quantity demanded is 12 units.

The price charged by the seller was not provided in the given details nor in the demand equation. If we assume the consumer pays $2 regardless of the actual price due to a third-party covering the rest, then we do not have enough information to determine the actual price charged by the seller without additional details about the third-party payment mechanics.

Therefore, the detailed options provided (A, B, C, D) do not directly match the outcome of the demand equation with the given information.

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