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The oil is produced by a single refinery (a monopolist) which is owned by an entrepreneur called Sluggo. The demand for oil which is produced in Sluggo's refinery is Q= 50-P. The cost function of the refinery is given as: C(Q)=8+4Q.
It is also known that there is a (constant) marginal external cost of 6$ per unit of oil production resulting from environmental damage associated with production.
(a) As a profit maximizer how much would Sluggo like to produce?
(b) Is the amount you find in (a) socially desirable level of output? Why or why not?
(c) If your answer to (b) is no, what is the socially desirable level of output?
(d) If the government decides to use corrective tax to force Sluggo to produce the socially desirable level of output, how much will Sluggo's tax bill be?
(e) If the government chooses to subsidize Sluggo for each unit that he does not produce, how much subsidy should be given to Sluggo?
Assume the number of buyers in the market for handsanitisers increases, ceteris paribus.
Does this economic event result in a movement along the demand curve or a shift of the
demand curve?
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?
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 400a. As the price of tickets rises from $200 to $250, what is the price elasticity of demand for (i) business travelers and (ii) vacationers?
There are ten restaurants in your town. On a given night each restaurant can produce up to twenty full-course dinners for $20 each. What is the total market supply of full course dinners tonight, for $20?
Considering that there are more than 2 individuals in this world including Bruce, the Almighty asked Bruce to choose amongst the following states of the world - one, where Bruce is the only person who is better off by 100 units, while everyone in the world is worse off and are getting an allocation of 10 (call this state of the world as ‘self-interest’); two, where everyone in the world is better off and each one of the individual is getting 100, except Bruce who has been made worse-off and is getting an allocation of 10 (call this state of the world as ‘philanthropy’). Bruce chose latter over former. Comment over the entire situation that Bruce is facing. Also, comment over Bruce’s choice and giver reasons explaining the rationale behind that choice.
