Consider a small city's dry-cleaning market, which is monopolistically competitive. Currently, the typical dry-cleaner is charging $5 an item. The average cost of dry-cleaning is $2. The typical dry-cleaners clean 1,000 items per week. (Each customer drops off approximately 4 items). Suppose, a new dry-cleaner was to enter t
In perfectly competitive market a firm typically has short run average total cost curve and marginal cost curve of: ATC-100+Q+(100/Q) MC=100+2Q 1. Assume the firm faces an output price of $110. How many units of output does firm produce 2. Consider that average total cost is minimized at 10 units of output, what would we
The firm's cost of producing this drug is given by the following function: TC = 100Q Suppose that the U.S. consumers can buy the same drug at Canadian prices over the Internet through Canadian pharmacies. (Assume that shipping costs are zero.) How do I determine the price and profit the drug company will set for its drug n
Suppose that a firm has a budget of $12,000, that the wage rate is $10 per hour, and that the rental rate of capital is $ 100 per hour. If the wage rate increases to $15 per hour and the rental rate of capital rises to $120 per hour, what happens to the producer budget or isocost line? What will happen to the equilibrium level o
Assume that GDP (Y) is 5,000. Consumption is C=1,000+.3(Y-T). Investment is I=1500-50r, where r is the real interest rate. Taxes (T) are 1,000 and government expenditures (G) are 1,500. a). Calculate the equilibrium values of C, I, and r. b). Calculate the equilibrium values of private saving, government saving, and tota
The local government in a west Coast college town is concerned about a recent explosion in apartment rental rates for students and other low-income renters. To combat the problem, a proposal has been made to institute rent control that would place a $900 per month ceiling on apartment rental rates. Apartment supply and demand co
16) If demand increases while supply decreases for a particular good: a. its equilibrium price will increase while the quantity of the good produced and sold could increase, decrease, or remain constant. b. the quantity of the good produced and sold will decrease while its equilibrium price could increase, decrease, or remain
Critically discuss that there is no satisfying theory that explains the behaviour of firms in oligopoly markets. Which theories should I include in the analysis? Which examples are relevant to these theories? Furthermore, may you include some journals that will enhance my understanding of the key points that you will include
Suppose the market demand curve in an industry is characterized by P=1-Q, where P is the market price and Q is the total quantity supplied to the market. Suppose there are three firms in this industry. All have a zero marginal cost of production. 1. In a one-shot interaction, what is the Cournot quantity for each firm? 2.
Suppose that a cake is being divided in the following way among two players. Each player writes down a number from zero to one on his piece of paper. Then both players turn over their pieces of paper. If the sum is less than or equal to one, each player gets a share of the cake equal to the number he wrote. If the sum is bigge
There is a pure exchange economy with two identical consumers, A and B. Consumer A has 8 units of good 1 and 4 units of good 2. Consumer B has 4 units of good 1 and 8 units of good 2. a) Show in an Edgeworth box diagram what a competitive ( price taking) equilibrium would look like in this economy. b) Is this competitive equ
If QD=100-6P and QS=4p I understand how to get the equilibrium of p=10 and Q=40 but I need to find consumer and producer surplus ...how does that get calculated? b) How does the equilibrium change if a price floor of $12 is put in place? Calculate deadweight loss from this price floor. c) Suppose a tax of t=$2 is
I need help on these two microeconomic theory problems dealing with a monopoly marginal cost. See attached file for full problem description.
Reasons why monopolists do not exhibit resource allocative efficiency. Why monopolists cannot obtain any price they wish. Deadweight losses when a firm produces at Q =MC. Social costs of maximizing marginal utility. 1. The perfectly competitive firm exhibits resource allocative efficiency (P=MC), but the single price monopoli
Calculating optimal output and profits and comparing monopoly to perfectly competitive markets. 1. Perfectly Competitive Equilibrium. Bada Bing, Ltd., supplies standard 128 MB-RAM chips to the U.S. computer and electronics industry. Like the output of its compet6itors, Bada Bing's chips must meet strict size, shape, and s
What divergences arise between equilibrium output and efficient output when spillover benefits and costs are present? Provide some "real-life" occurrences where both a positive and negative externality took place. What was the role of outside market forces in these situations?
Discuss answers to the following questions: Consider an economy in which: C=100+0.5Y and I=100 - output is equal to income a) Find equilibrium income. b) What is the multiplier for consumption spending for this economy? c) What is the multiplier for investment spending for this economy? d) What is the marginal pro
Due to severe damage, a gas pipeline supplying gas to Arizona was shut down for a few weeks in the summer of 2003. Gas became scarce in Arizona, and prices rose, causing consumers to panic. Address the two questions in the analysis of this event's affect on the market equilibrium. 1) Was there a shift in the supply curve
1) The government will tax a good for various reasons, resulting in a fall in equilibrium quality while the prices rise. Could someone explain how price controls and taxes have influenced your purchasing choices. 2) Give an example of a shift in consumer and producer surplus. How did it affect the market efficiency? Please ex
Supose that Px=aLX * w + aKX * r= 60 *w +40*r, and that Py=aLY* w + aKY * r=75*w +25 *r if px=py=100 what are the equilibrium values for wage and rental rate If Py rose to 120 and the input coefficents didn't change what would be the new equilibrium values of w and r? Please show your work because I'm having problems wi
(See attached file for full problem description) --- 1. Demand Schedule Supply Schedule Price Quantity Demanded/Year Price Quantity Supplied/yr $2.25 12 2.25 30 2 16 2 28 1.75 20 1.75 26 1.5 24 1.5 24 1.25 28 1.25 22 1 32 1 20 a. Plot the supply and demand curves and indicate the equilibri
Using diagrams for both the industry and a representative firm, illustrate competitive long run equilibrium. Assuming constant costs, employ these diagrams to show how (a) an increase and (b) a decrease in market demand will upset the long-run equilibrium. Trace graphically and describe verbally the adjustment processes by which
Please help to the following questions. Thank you for your assistance. Suppose that inventory growth in the U.S. is unexpectedly high this year. What is likely to happen to output next year, and why? Is the economy currently in equilibrium? Use the Keynesian cross model to explain your answers.
The United States is proposing a significant increase in duty on Canadian softlumber. USE APPROPRIATE DIAGRAMS to answer the following questions about the Canadian economy. A. How would higher duty on softlumber affect the equilibrium income and the price level in the short run? B. How would higher duty on softlumber affe
Suppose AE = 0 + 0.75Y a. Draw the aggregate expenditure curve and indicate the equilibrium income. b. What are the slope and the vertical axis intercept of the curve? c. What is the multiplier? d. What is the effect of $100 increase in autonomous exports on equilibrium income? Demonstrate your answer graphically.
There are two Markets. Both Market A (Athletes) and Market B (Boats) have the same demand curve of Qd = 400 - 20 Pd where Pd is the price consumers pay and Qd is the quantity demanded. Market A has a supply curve of Qsa = 100 + 10Psa where Ps is the price received by suppliers and Qs is the quantity supplied. Market B h
Consider the following IS-LM model: Goods Market C=200 +.25Yd I=150 +.25Y-1000r G=250 T=200 Money Market Md=2Y-8000r Ms=1600 a. Derive the IS Relation. (You want an equation with Y on the left side and all else on the right.) b. Derive LM relation. (It will be convenient for later purposes to have r on the left side, and
Show the short-run profit maximizing equilibrium graphically for a sports team facing a negatively sloped linear demand with a short-run total cost function (SRTC) of the form: SRTC = TFC + TVC = TFC + α A, where TFC is total fixed cost; TVC is total variable cost; A is attendance and α > 0 is a constant. On your diagram ident
Equilibrium Price Industry demand is given by: QD = 1000 - P All firms in the industry have identical and constant marginal and average costs of $50/unit a. If the industry is perfectly competitive, what will industry output be? What will be the equilibrium price? What profit will each firm earn? b. Now suppo
You are head of the Transportation Department in Kingston evaluating the operation of a light rail line that was previously built (probably in 2050) across Lake Mali. It has operated for long enough to pay back capital costs, but you still have to worry about operating costs. You are considering several options: - Don't operate