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Harold and Maude both love Russell Stover Maple Creme Chocolate Covered Eggs. The both go into Walgreeen's where the Eggs are priced as follows: 1 egg costs 80 cents; 2 eggs costs $1.60; and 3 eggs costs $2.00. Harold's Marginal Valuation (MV) for the first egg is $2.00; his MV for the second is $1.00; his MV for his third is 70 cents. Maude's Marginal Valuation (MV) for the first egg is $1.00; her MV for the second is 70 cents; her MV for her third is 20 cents.
1. How many Russell Stover Maple Creme Chocolate Covered Eggs does Harold buy?
Explain show the effects on equilibrium price and quantity of AC in winter season
?
Your finance officer has just advised you that the public transport system faces a deficit. Your board does not want you to cut service, which means that you cannot cut costs. Your only hope is to increase revenue? Would a fare increase boost revenue? You consult the economist on your staff who has researched studies on public transportation elasticities. She reports that the estimated price elasticity of demand for the first few months after a price change is about-0.3, but that after several years, it will be about -1.5.
(a) Compute what will happen to ridership and revenue over the next few years if you decide to raise fares by 5%
What are examples of a monopolistically competitive firm, oligopoly, and monopoly in your local area? In your example, please relate to the market characteristics of each of the market structures?
Please. Details, thank you.
How can government of Pakistan distribute the burden of a payroll tax? Explain your answer
with reference to some case study. (Hint: You can consult chapter # 6).
If the government quadruples the amount of tax on gasoline, can you be sure that revenue from
gasoline tax will rise? Can you be sure that the deadweight loss from the gasoline tax will rise?
Explain. (Hint: Incorporate graphs)
There are four consumers willing to pay the following amounts for haircuts:
A: $7 B: $2 C: $8 and D: $5
There are four haircutting businesses with the following costs;
Firm 1: $3 Firm 2: $6 Firm 3: $4 and Firm 4: $2
Each firm has the capacity to produce only one haircut. For efficiency how many haircuts can be
given? Also find out how large will be the total surplus
Suppose that a market is described by the following supply and demand equations:
QS = 3P
QD = 400 – P
a. Solve for the equilibrium price and the equilibrium quantity.
b. Suppose that a tax of T is placed on buyers, so the new demand equation is
QD = 300 – (P + T).
Solve for the new equilibrium. What happens to the price received by sellers, the price paid by
buyers, and the quantity sold?
c. Tax revenue is T x Q. Use your answer to part (b) to solve for tax revenue as a function of T.
d. The deadweight loss of a tax is the area of the triangle between the supply and demand curves.
Recalling that the area of a triangle is 1⁄2 x base x height, solve for deadweight loss as a function
of T.
e. The government now levies a tax on this good of $200 per unit. Is this a good policy? Why or
why not? Can you propose a better policy?
The market demand is now Q(P) = 30000/P2. There are three suppliers, each with constant marginal cost (a reasonable approximation in electricity generation). Firm 1 has a capacity of 200 at MC = 5. Firm 2 has a capacity of 100 at MC = 8. Firm 3 has a capacity of 100 at MC = 10. Now, all three firms merge and become a single firm. The newly created firm becomes a monopoly.
- Compute the profits maximizing price and quantity this firm will choose.
- Compute (approximately) the deadweight loss in the monopoly equilibrium.
Apply industry concepts of production and productivity theory; short run cost and revenue decisions; long run cost economies and dis economies of scale and profit maximizing decisions
