Economics Answers

consumer surplus indicates that

a) You are examining and reporting on the market performance of a very small number of firms that are known to often collude in setting output prices and quantities. Illustrate and explain using a diagram what effect this behaviour is most likely to have on the allocation of factors of production.

b) What will happen if one of these firms’ cheats on the others in some way? Illustrate and explain using a diagram.

Jean Baptiste Sey a Frenchman economist from early nineteen century is credited with stating “supply creates its own demand.”Today some economists appear to argue that “demand creates its own supply” Explain why neither statement is precisely correct, and how demand and supply together create the market for goods and services

A small town is served by many competing supermarkets, which have constant marginal
cost.
a. Using a diagram of the market for groceries, show the consumer surplus, producer
surplus, and total surplus.
b. Now suppose that the independent supermarkets combine into one chain. Using a
new diagram, show the new consumer surplus, producer surplus, and total surplus.
Relative to the competitive market, what is the transfer from consumers to
producers? What is the dead-weight loss?

The following graph shows a firm in a monopolistically competitive industry.
a. Show the firm’s short-run profit-maximizing quantity and price. Is the firm making a
profit?
b. Carefully explain what will happen in the industry over time, and draw a graph of a
monopolistic-ally competitive firm in long-run equilibrium.

The following table shows the demand for a product produced by a monopolist, who has
a constant marginal cost and an average total cost of $45 per unit.
Quantity (thousands of units) Price (dollars per unit)
0 120
1 105
2 90
3 75
4 60
5 45
6 30
a. Calculate the total revenue and marginal revenue for each level of quantity.
b. What are the profit-maximizing level of output and the price of the product?
c. Calculate the monopolist’s profit.
d. Calculate the Lerner Index for this industry.

Analyze the two following situations for firms in competitive markets:
a. Suppose that TC = 100 + 15q, where TC is total cost and q is the quantity produced.
What is the minimum price necessary for this firm to produce any output in the short
run?
b. Suppose that MC = 4q, where MC is marginal cost. The perfectly competitive firm
maximizes profits by producing 10 units of output. At what price does it sell these
units?

what is a demand curve

California Electric has a cost of equity 16 percent. the firm consistently been authorized a return on equity capital below this cost. Also, the effects of regulatory lag and attrition have further reduced the realized return to the 13 percent range. If the utility expects this problem to continue, what actions would you expect Cal Electric to take as a result?

Describe a discretionary fiscal stimulus package that could be used that would not bring an increase in the budget deficit.

A discretionary fiscal stimulation package that would avoid a budget deficit is a simultaneous and equal​ ______.    

A.
increase in government expenditure and an increase in taxes
B.
increase in transfer payments and a decrease in taxes
C.
decrease in transfer payments and increase in the quantity of money
D.
decrease in government expenditure and taxes
Explain the risks of discretionary fiscal policy in this situation

Discretionary fiscal policy is risky because it is hampered by all of the following lags except​ ______.

A.
​law-making lag
B.
recognition lag
C.
impact lag
D.
business cycle lag