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General Equilibrium

Labor, capital, & inputs & outputs

This is a 4 part question: A manufacturer is hiring 20 units of labor and 6 units of capital (bundleA). The price of labor is $10 and the price of capital is $2 and at A the marginal products of labor and capital are both equal to 20. 1.Beginning at A if the manufacturer increases labor by 1 unit and decreases capital by

Price Ceilings/Discriminations

1. Consider a price ceiling imposed on a monopoly that is set below the competitive price. Design a diagram showing the monopoly equilibrium in this case. Use your diagram to show that a price ceiling set this low will create a shortage. 2. What conditions must hold for a firm to be able to practice price discrimination? How

Verify Answers

If the workers at a firm successfully negotiate a wage increase, a. The demand curve for the product the firm produces shifts rightward. b. The demand curve for the product the firm produces shifts leftward. c. The supply curve for the product the firm produces shifts rightward. d. The supply curve for the product the f


When the economy is in equilibrium,________________. a. there are increases in inventory b. there are decreases in inventory c. total expenditures equal total production d. people want to buy more than will be produced Suppose the economy's short-run equilibrium point is to the left of the National Real GDP. Which of

Optimal price/output and economic profits

(Demand) P=$85Q-$0.2Q (Marginal Reveune) MR=$85-$0.4Q (Total Cost) TC=$900+$20Q+$0.8Q2 (Marginal Cost) MC=$20+$1.6Q where P is price (in dollars), Q is output (in thousands of megawatt hours) and TC is total cost (in thousands of dollars). a) if the firm were operating as a pure monopoli

Monopoly Pricing and Output

3 (Monopoly Pricing and Output) Shelley works at University florist in Minneapolis. Every Friday night, the owner of the florist shop gives her the unsold inventory of roses at no cost, which Shelley then sells on Riverside Avenue to pedestrians and motorists. Shelley has a monopoly on rose sales in this area, and faces a d

Marginal Benefits of Abating Emissions

1) Externalities 1 Assume that scientific studies provide you with the following information concerning the benefits and costs of sulfur dioxide emissions: Marginal benefits of abating (reducing) emissions: MB = 400 - 10A Marginal costs of abating emissions: MC = 100 + 20A where A is the quantity abated in millions of

Profit Maximization and Producer Surplus

Profit Maximization and Producer Surplus. Please show all your work. 1) Consider a competitive market in which the market demand curve for microwave ovens is expressed as: P = 1000 - 5Q And the supply of microwave ovens is expressed as: P = 100 + Q Where P is the price per unit and Q is the total number of micr

Game Theory #1 - Dominant Strategy/Nash Eq. (VHS vs. Betamax)

Please show all work and diagrams if necessary. 1) In the initial videocassette market (home use), there were two competing standards: Sony's Betamax and the VHS standard. Using hypothetical payoffs, we can analyze how both manufacturers can benefit from cooperation rather than competition. The following lists the payoff

monetary authority Interest rate

-------------------------------------------------------------------------------- If the monetary authority wants to stimulate an economy in a recession, it often reduces interest rates, and if the inflation rate is low, as it has been in the early part of the current decade, these interest rates can become very low. How effecti

Supply and demand questions

1. Can you illustrate by using supply and demand graphs what happens to the equilibrium price and quantity in each of the following situations. Please dont forget to label the graphs. a. A rise in the price of tea on the market for coffee. b.Expectations of higher prices on the market for housing. c.A decline in the price o

Costly Memories: Tivo, iPod, and X-Box: An Industry Struggles for Profits

Read the following summary of a Wall Street Journal article by Scott Thurm that appeared on 14 October 2004, entitled, "Costly Memories: Tivo, iPod, and X-Box: An Industry Struggles for Profits," and use this information to answers questions 1 & 2: SUMMARY: The TiVo video recorder, the iPod music player and the Xbox game ma

Competitive Markets

Suppose you are given the following information about a particular industry: QD = 6500 - 100P Market Demand QS = 1200P Market Supply C(q) = 722 + q2/200 Firm total cost function MC(q) = 2q/200 Firm marginal cost function Assume that all firms are identical and that the market is characterized by p

Game Theory Simultaneous-Moves

Homer and Marge are playing the attached simultaneous-move, one-shot game. (a) Does either player have a strictly dominant strategy? (b) What is the solution to this game? Is the solution a Nash equilibrium? (c) Suppose that this simultaneous-move game is modeled as a sequential-move game with Homer moving first. Illustrate


1. Interferences such as rent controls and farm price supports reduce the efficiency of markets. In terms of the balance of Qd and Qs, how/why do they do this? Draw a supply & demand graph (or graphs) to illustrate your answer. 2. What is consumers surplus? Why does it exist? Why is consumers surplus at a maximum when the


Dear Sir: I am preparing for the Clep test and I am studying out of a book from the library. However, there are no answers so that I can see if I am on the right track. Can you please assist me witht he following questions? 1. If marginal cost is less than average cost, average cost must fall when more units are produc

Maximizing Profits in a monopolistically competitive model

I'm confused on a concept and I have a test coming up, so I need a bit of help on a discussion I had in class today about profit maximization I don't fully understand... Given a situation (discussed in class today) in a monopolistically competitive market (NOT a monopoly), if my price is $10 for an item and at my present rate

4 Questions...

Just answers the questions below using some economic concepts. 1.) Discuss an example of supply and/or demand that you have observed in the real world. Be don't use the example for the questions below, use something else. 2.)I was thinking about the gas prices, in a way it has to do with supply and demand, right? Because

Several Economics Questions

1) An imperfectly competitive firm has the following demand and cost functions: P=230-20Q C=50+30Q a. What is optimum output? b. What is equilibrium price of this output per unit? c. What is optimal revenue? d. What is total profit? 2) A firm in a perfectly-competitive industry where market price of output prevailing

Need to solve the following problem

11. Economies of scale: a. means that per unit costs decrease as output increases in the long run. b. are caused by loss of team spirit as a firm expands in size. c. is the result of mismeasurement of opportunity costs. d. occur when per unit costs increase as one input is added to production. 12. Kellogg's, the bre


1.1 2Demand A manufacturer faces a downward-sloping demand curve for her product: Q = 300 - 2P (demand) (a)What is the equation for the inverse demand curve? () (b)What is the choke price? () (c)What is the equation for the marginal revenue curve? () (d)At what price and quantity are total revenues maximize

Stackelberg duopoly

I have changed the values and need the model to plug my numbers in. Please solve with explanations. 1. The inverse demand curve for a Stackelberg duopoly is P = 5,000 - 3Q. The leader's cost structure is CL(QL) = 1250 + 10QL. The follower's cost structure is CF(QF) = 250 + 20QF. a. Determine the reaction fu

#14 Long-Run Equilibrium - Competitive markets

In a competitive market with a downward sloping demand curve, a tax that increases the fixed cost of every firm will: a) reduce the number of firms supporting long run equilibrium b) increase the long-run equilibrium price. c) not cause the number of firms supporting long-run equilibrium to change d) answers a and b

Profit-maximizing Equilibrium

Under profit-maximizing equilibrium, which of the following will not be equal to the other three? a) the marginal revenue product of input X. b) The price of input X. c) the marginal cost of input X. d) the marginal product of input X. e) all will be equal.

Long Run,Short Run,Law of diminishing Marginal return

Subject: Long Run,Short Run,Law of diminishing Marginal return Details: Define Short Run and Long Run. Discuss three types of decisions that firm have to take in Long Run. State the Law of Diminishing Marginal Returns. Differentiate between Diminishing Returns to Factors and Diminishing Returns to Scale.

Game Theory Contemplation

Two would-be wine makers (Mr. Ripple and Poor Richard) are contemplating entering the low end wine market in the country of Zuba. Two types of wine are being considered by both?Brown Bag and Street Corner. Both wines are franchised and the franchisees are offering the rights to bottle their wine in Zuba in an open English aucti

long run cost of equilibrium

The long run total cost curve of a typical firm in the perfectly competitive widget industry is: TC = 6,000q - 200q2 + 2q3 where q is the output in units of widgets produced by the firm. The long run demand curve for widgets is estimated to be:

economics all about OR what does the study of economics involve

1.What is economics all about OR what does the study of economics involve? How is the need to choose related to concept of cost? 2a) . Define Diminishing Marginal Utility b) . Given two goods X and Y, how does a consumer achieve equilibrium? c) What happens to consumer equilibrium if the price of one of the commodities fa

3551-Managerial Economics-03

7. (9-6) The Deering Manufacturing Company's short run average cost function in 1999 is AC=3+4Q, where AC is the firm's average cost (in dollars per pound of the product), and Q is its output rate. a. Obtain an equation for firm's short run total cost function. b. Does the firm have any fixed costs? Explain? c. If the price o