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Demand = 20-P; Supply = P/3; both linear. What is deadweight loss associated with a $4/unit output tax levied on consumers?
When APL is positive but declining, the MPL could be (i) declining (ii) zero (iii)
negative or (iv) any of them. Which one is the correct alternatives? Explain with diagram.
The income elasticities of demand for movies, dental services, and clothing have been
estimated to be + 3.4, +1 and +0.5, respectively. Interpret these coefficients, what does it
mean if an income elasticity coefficient is negative?
A perfectly competitive market has a demand curve given by the equation 𝑄 = 2000 − 2𝑃 where Q is the market quantity demanded and P the price per unit. Each firm in the market has the total cost given by 𝑇𝐶 = 1000 + 100𝑞 + 10𝑞' and the marginal cost
𝑀𝐶 = 100 + 20𝑞.
A. If the current market price is $400,
A.1 Calculate the market quantity. Q= 1200
A.2 Find the quantity maximizing profit for each firm. q= 15
A.3 How much profit does each firm earn? Profit = $1250
A.4 Assess whether the situation in A.3 is a long run or a short run. Justify your answer. SR b/c Profit > 0
A.5 Graph your results. OK
B. Suppose that the market is in the long run.
B.1, How much profit will each firm earn and what will be the market price?
II=0, P=$300
B.2 What is the market quantity? Q=1400
B.3 How many firms operate in this market? N =140
B.4 Why is the number of firms in A different from the number of firms in B?
Express the budget line of the consumer both algebraically and diagrammatically
The demand and supply equations are Qd = 100 – 10P and Qs = 30 + 5P. Compute for the
Price equilibrium and quantity equilibrium.
The quantity supplied of the commodity in the market is 30 units when the
selling price per unit is P7. Derive the supply equation given that because of the increase
in price to P10 per units, the quantity supplied of this commodity increased to 50 units.
The quantity demanded of the commodity in the market is 25 units when the
selling price per unit is P12. Derive the demand equation given that because of the decrease
in price to P8 per units, the quantity demanded increased to 60 units.
The government of Beach Island is inviting investors to bid for the exclusive right to provide satellite television broadcast service to its residents. The market demand for this service is P=55-0.01Q, where Q is the number of households that would subscribe to the service and P is the monthly fee charged to the subscribers. The associated marginal revenue curve is MR=55-0.02Q. Funtime TV Company is interested in bidding for the right to provide this service on Beach Island. It has a constant average and marginal cost of R5 for providing the service to each household.
(A) If Funtime TV Company were to be awarded the exclusive right to provide cable service on Beach Island, how many households would it service?
(B). If Funtime TV Company were to be awarded the exclusive right to provide cable service on Beach Island, what price would it charge per household per month?
(C). If Funtime TV Company were to be awarded the exclusive right to provide cable service on Beach Island, how much profit would it earn?
İf the supply curve is q = 3 + 1.5p, what is the producer surplus if the price is 12?
