Consider a market in which the efficient level of trade is 7,500 units. There units were traded. would be a positive Deadweight-Loss if 1) 9,250 2) 4,500 O3) 5,125 4) All of the above answers are correct
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- C2) Company A is the only supplier of glass in Big Apple City used for tall buildings’ exteriors. Its marginal cost of production is cA=1, and it has no other production costs. The demand for such glass in Big Apple city is QD=2-P. Company B in Jersey City produces the same glass and is considering whether to expand to Big Apple city. If it enters, it needs to get a permit to allow it to be a supplier in the Big-Apple city at a cost of L=0.5, which does not vary with quantity of output, and its marginal cost of production is cB=0.5. If it expands to the Big-Apple city, companies A and B both supply to the market, and the market price P satisfies QA+QB=2-P, where QA is company A’s production level and QB is company B’s. a) If company B expands to the Big-Apple city, what is the resulting price in a Nash equilibrium? b) Company B hires a consulting company to advise whether it should expand to the Big-Apple city. If you’re running the consulting company, what is your advice? Explain…The management at MooseWoods Park is trying to decide whether to replace their portable toilets with flush toilets at the very popular MooseWoods Campground, as well as how many flush toilets to install, if they do choose to install them. They concluded that they will install flush toilets if the total surplus is greater than $50 in relation to the number of flush toilets at the equilibrium and the cost per campsite per night. Installing flush toilets will involve an increase in the cost per campsite per night. Researchers have calculated the demand and supply curves for flush toilets at this park and discovered that they are both perfectly straight lines. At $35 per campsite per night, no one will want flush toilets. At $0 per campsite per night, campers will demand seven flush toilets. Managers are willing to supply no flush toilets at the current campsite cost of $5 per night, but are willing to supply eight flush toilets at $25 per campsite per night. Please use the supply, demand…The Estimated Supply Function for biltong in garankung Q=178+40p-60 ph per households 405 R1.50 to R3.00 R1050 (a) How does the supply FUNCTION Change if if the game meat doubles from Q=178 +40p -60 ph 178 +40p - 60 (1.50) 178 +40p-90 Guppy) 178-90 88+40PX Q=178+40p- 60 Ph 178 +40p - 60 (3) чор 178 + 40P - 180 118-180 A don't e- graphically! supply. 52 Hddns Q R3. 3+1:30 4.5 118+ чор-60 178 +40p- 178 +40p- 178-270 -9
- A steel mill, S, produces 20 tons of water pollution for every 100 tons of steel it produces. The downstream village of Watertown (WT) spends $150 per ton of water pollution from S to eliminate its environmental harm . S is a price taker in an international market where the demand for steel is p = 100 – 3X and the market supply of steel is p = 40 + 3X. X is in units of one (1) million tons per day and p is the price in dollars per ton of steel. S has a daily increasing marginal cost of production function, MC = x. S's Total Cost function = x*x/2 where x is S’s daily output. (a) If S has no legal liability for its pollution, what is S’s daily production of steel? How does your answer here relate to the concept of private efficiency? (b) WT wants to bargain with S to reach an optimal agreement on this pollution. Assuming S is still not legally liable for its pollution and both S and WT do not use lawyers, would there be an agreement? How does yo ur answer here relate the concept of…Two firms sell an identical product in a market by setting prices simultaneously. Consumers buy from the firm that offers the lower price; if the prices are identical, the firms split the demand. If ? is the lowest price (in dollars), aggregate demand is ? = 250 − ?. Suppose prices can only be set in increments of 1 cent. (a) Suppose Firm 1 and Firm 2 have limited production capacities of 40 units each. The marginal cost of firm 1 is $35 and the marginal cost of firm 2 is $25. If Firm 1 believes that Firm 2 will set a price of $30, what price should Firm 1 set? Show your work. (Assume efficient rationing while calculating firm’s residual demand.) (b) Ignore the information in part (a). Suppose each firm has unlimited capacity, but that the marginal costs of Firm 1 and Firm 2 are $40 and $150 respectively. Do ?1 = 149.99 and ?2 = 150 satisfy the requirements of a Nash equilibrium? Explain why. You must explain why a strategy is a best response or not to the other strategy.Assume two products, 1 and 2 are produced at zero MC, but there are fixed costs of €900. The demands for the products are: P1 = 7 - 0.02q1 and P2 = 5 – 0.01q2. (i) Determine the Ramsey prices for the two goods, as well as the consumer surplus from both markets. (ii) Assume that last year the prices were P1 2 and P2 = 4. Compare these prices to those found in (i) and argue if the CS is better, worse or identical to (i).
- An Australian firm and a US firm produce a homogeneous good that is sold only in Japan. The marginal cost of producing the good is constant and equal to 30 in both countries. The demand curve for the good in Japan is: P = 120-Q where Q = QA +QUS represents the sum of the quantities. produced by the Australian and the US firms, respectively. (b) Assume the Australian firm can commit to an output before the US firm. Solve for the Stackelberg Equilibrium price, sales and profits of each firm in Japan. Price profit AUS2 ,output_US2 profit_US2 output_AUS2An exporter of handbags has just entered a new market. This exporter faces the following relationship between the price of handbags and the demand for them: P=15+ 4.800 D 2.500 D² , D>0 where P is the price per unit and D is the demand per month. The exporter wants to maximize his profit. The fixed cost is $2055 per month and the variable cost #33 per unit. How many handbags should be produced and sold each month, in order to maximize profit? Round your answer to 0 decimal places.An exporter of handbags has just entered a new market. This exporter faces the following relationship between the price of handbags and the demand for them: 4,800 3,000 P= 5+- D>0 D2 where P is the price per unit and D is the demand per month. The exporter wants to maximize his profit. The fixed cost is P2,000 per month and the variable cost P35 per unit. How many handbags should be produced and sold each month, in order to maximize profit? Blank 1 units
- The supply and demand curves of a product are shown in Figure 6.13. Approximate the difference in the total gains from trade if the price is artificially increased from the equilibrium price of p = 95 to p*= 110. p(Sunit) 200 180 888888888 160 140 120 100 50 100 150 200 Figure 6.13 O(a) $137.50 Ⓒ (b) $3,250 O (c) $4,675 (quantity)Price (per kilo) 3 4 5 6 FirmA(000 kg) 10 20 30 40 Firm B(000kg) 10 15 20 25 Firm C(000kg) 15 28 41 54 Market demand(000kg) - - - - i) Based on the table which farmer is least sensitive to change in price? Prove your answer with calculation. (iii) If the market for potatoes only comprises three farmers, what is the market supply function for potatoes?Suppose that fixed costs for a firm in the automobile industry (start-up costs of facto-ries, capital equipment, and so on) are $5 billion and that variable costs are equal to$17,000 per finished automobile. Because more firms increase competition in themarket, the market price falls as more firms enter an automobile market, or specifi-cally, P = 17,000 + (150/n), where n represents the number of firms in a market.Assume that the initial size of the U.S, and the European automobile markets are 300million and 533 million people, respectively.a. Calculate the equilibrium number of firms in the U.S. and European automobilemarkets without trade.b. What is the equilibrium price of automobiles in the United States and Europe if theautomobile industry is closed to foreign trade?c. Now suppose that the United States decides on free trade in automobiles withEurope. The trade agreement with the Europeans adds 533 million consumers tothe automobile market, in addition to the 300 million in the…