Explore BrainMass
Share

# Case Study: The Price System

This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

See the attached file for complete problem (along with data).

CHAPTER 14

THE PRICE SYSTEM

ACTIVITY

Reminder: For consumers following the Optimal Purchase Rule: MU=P.
Use the Q of chairs and the P (MU) as the Demand Schedule.
For firms under conditions of perfect competition, P=MR
To maximize their profits, they must produce where: MR=MC.
(You have to calculate MC from Total Cost given above.)
Use the Q of chairs and the MC figures as the Supply Schedule.

https://brainmass.com/economics/general-equilibrium/case-study-the-price-system-517916

#### Solution Preview

1. a) See the attached file. The efficient level of output is where MU = MC. In this case, the efficient level of output is 5 chairs.
b) Demand schedule: P = MR = MU and Qd = number of chairs
Supply schedule: P = MC and Qs = number ...

#### Solution Summary

This solution presents mathematical analysis of a case study of the market for chairs in a community. The topics covered are:
1. Marginal utility and total cost
2. The efficient level of output
3. Market inefficiency
4. Price ceilings and price floors
Step by step calculations with explanations are provided.

\$2.19