Microeconomics Answers

Give the formulas for and plot AFC,MC,AVC and AC if the cost function is 1.C=10+10Q, 2. C=10+q², 3.C=10+10q-4q² +q³.

Mike, Rosie, and Shobber live in separate houses along a dark and windy road. The following represent their marginal benefits for street lights:

MBMike=200-2QM

MBRosie=100-QR

MBShobber=100-2QS

where QM represents the quantity of street lights consumed by Mike, QR is the quantity of street lights consumed by Rosie and QS is the quantity of street lights consumed by Shobber. The Mayor of their town considers street lights to be a public good and is charged with purchasing the optimal number of street lights from Boone’s Light Shop. Boone’s is willing to sell street lights for $150 per light.

b. What quantity of street lights should the Mayor purchase? Why? Suppose the Mayor is able to implement a pricing scheme to charge users for the illumination services.

c.  How much should each individual be charged? Does the tax revenue cover the total cost of providing the optimal number of streetlights?

Three pirates (in order of seniority A, B, C) find a treasure chest containing 100 (indivisible) coins. They have the following rules regarding the distribution of treasure. The most senior pirate on the ship proposes a plan of how to distribute the coins, and everyone takes a vote on the plan. If there are at least as many votes in favor as against, the vote passes and distribution is done accordingly. If the majority votes against, the proposer is thrown overboard, after which the now most senior pirate makes a proposal. Pirates prefer more coins to less. If a pirate is indifferent between voting for or against in terms of coins, he prefers throwing the proposer overboard. Find the sub-game perfect Nash equilibrium of this game. Hint: use backward induction and read carefully. 

Do we need cashless transaction? What are the modes of cashless transaction

Question:

Suppose that business travelers and vacationers have the following demand for airline tickets from New York to Boston:

PriceQuantity Demanded (business travelers)Quantity Demanded (vacationers)

$150

2,100tickets

1,000tickets

200

2,000

800

250

1,900

600

300

1,800

400

(a.) As the price of tickets rises from $200 to $250, what is the price elasticity of demand for

(i) business travelers and (ii) vacationers?

A firm’s profit is given by the following function, which maps output q ≥ 0 onto profit (revenue minus cost). π(q) = 11q − (q 2 + 2q + 10) = −q 2 + 9q − 10, The firm is constrained by a quota such that output q cannot be greater than a value Q. (a) What is the domain of this profit function? 1 of 2 ECON10071/20071 - 2020/21 (b) Given this, what is (global) profit maximising output when (i) Q = 6, and when (ii) Q = 2.