Answer to Question #219103 in Microeconomics for De prince polymath

Question

(Question 1) Demonstrate the profit levels, for market with discrimination and market without discrimination.

(Question 2) Give brief but succent conceptual discussion on welfare theory and resource allocation.

Answer 1

Question 1

The profit levels for the market with discrimination:

I will have to profit maximize the distinct markets separately:

First derive the profit that maximizes market

Derive the demand function for market

Derive the inverse demand function:

Derive the total revenue:

Then:

Derive Marginal Revenue (MR):

Derive Marginal Cost (MC):

Set MR = MC to maximize profits:

Substitute in the demand function to derive price:

The profit levels for the market without discrimination:

I have to derive one single price for both markets; therefore, I combine or sum up the demand functions of the required markets:

Derive the inverse demand function of the total demand function:

Derive TR:

Derive Marginal Revenue (MR):

Derive Marginal Cost (MC):

Set MR = MC to maximize profits:

Substitute in the demand function to derive price:

Question 2

The term "theory of welfare" refers to more sophisticated ideological frameworks produced by academics with the goal of providing a comprehensive explanation of how social policy may and should be understood. It's also known as a meta-narrative since it operates above more concentrated conversations on specific topics or concepts. The social responsibility of an industrial institution has become increasingly important in recent years. According to the welfare theory, a factory is morally obligated to enhance the social conditions as well as the working conditions of its employees. Labor welfare is evolving into social welfare. A company's decision on where to employ scarce resources in the creation of goods or services is referred to as resource allocation. Any element of production (i.e., something that is utilized to make commodities or services) might be regarded a resource. Labor, real estate, machinery, tools and equipment, technology, and natural resources, as well as financial resources such as money, are examples of resources. Resources are optimally allocated in an economist's perfect world, which, of course, does not exist, when they are employed to generate goods and services that fit customers' requirements and wants at the lowest feasible cost of production. Production efficiency indicates that less resources are used to produce goods and services, allowing those resources to be put to better use in other areas of the economy, such as additional production, savings, and investment. It ultimately comes down to making what people want as inexpensively and effectively as feasible.