Imagine that we have found out the demand for a product for three individuals. Each individual's demand can be described by the demand functions: Q ^ A = 10 –2P Q ^ B = 10 –2P Q ^ C = 10 –2P a) What is the total demand function if the product above is a private product? b) What is the total demand function if the product above is a collective product? c) If the total cost of the product is given by the function TC = 7.5Q, what is the optimal quantity if the product is a private product? d) If the total cost of the product is given by the function TC = 7.5Q, what is the optimal quantity if the product is a collective product? e) Briefly state what characterizes a collective commodity with a maximum of one sentence

Imagine that we have found out the demand for a product for three individuals. Each individual's demand can be described by the demand functions: Q ^ A = 10 –2P Q ^ B = 10 –2P Q ^ C = 10 –2P a) What is the total demand function if the product above is a private product? b) What is the total demand function if the product above is a collective product? c) If the total cost of the product is given by the function TC = 7.5Q, what is the optimal quantity if the product is a private product? d) If the total cost of the product is given by the function TC = 7.5Q, what is the optimal quantity if the product is a collective product? e) Briefly state what characterizes a collective commodity with a maximum of one sentence

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter19: Elasticity

Section: Chapter Questions

Problem 7QP

See similar textbooks

Similar questions

Question 1 Tom is trying to figure out how to supplement his student bursary of £200 per week. He is considering a part-time job at a restaurant. The wage is £8 per hour. His utility function is U(C, L) = C L where C is his consumption measured in £ per week and L his leisure, measured in hours per week. The amount of leisure time that he has left after allowing for necessary academic activities is 50 hours a week. 1. Write out Tom's budget constraint and calculate the maximum value (i.e. he works the maximum time available) and minimum value? 2. Using your results from part 1, draw Tom's budget set (horizontal axis: leisure and vertical axis: consumption). 3. Let Y= student bursary, T = total amount of leisure time and w=wage. Set up the maximisation problem and calculate optimal consumption demand and leisure as a function of his student bursary and wage. 4. For the values given in the question, work out the value for optimal leisure hours and consumption spending L* and C*. 5.…
Suppose that the market demand curve for a good is given by D=80-2P-2I, where D is the quantity demanded, P is the price of the good, and I is consumer income in thousands of dollars. The good is a divisible good. The supply curve is given by S = 3P, where S is the quantity supplied. Assume that I = 15. (a) (10 points) How many units of the good are demanded with P = $4? (b) (10 points) Compute the size of a consumer surplus at P = $4. (c) (10 points) Derive the equilibrium price of the good.
Homework (Ch 05) The following graph input tool shows the daily demand for hotel rooms at the Peacock Hotel and Casino in Las Vegas, Nevada. To help the hotel management better understand the market, an economist identified three primary factors that affect the demand for rooms each night. These demand factors, along with the values corresponding to the initial demand curve, are shown in the following table and alongside the graph input tool. Demand Factor Initial Value $50,000 per year Average American household income Roundtrip airfare from San Francisco (SFO) to Las Vegas (LAS) $200 per roundtrip Room rate at the Grandiose Hotel and Casino, which is near the Peacock $250 per night Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. Graph Input Tool 500 Market for Peacock's…
1. How does a consumer’s optimal choice of goods change if all prices and the consumer’s income double? (Hint: focus on the budget constraint) 2. Output is produced according to a production process given by: Q = 4LK, where L is the quantity of labor input and K is the quantity of capital input. If the price of K is $10 and the price of L is $5, then what is the cost-minimizing combination of K and L capable of producing 32 units of output?
The demand and supply functions for a particular commodity are D(x) = 80e-0.001x and S(x)= 30e0.001r , where x is the number of units of the product, D(x) is the price that results in a consumer demand of x units and S(x) is the price that results in a producer supply of x units. a. Find the equilibrium point using your calculator and identify the equilibrium units and price. Give your answers to the nearest whole unit and nearest dollar. The value of x at equilibrium is units. The value of p at equilibrium is b. Determine the consumers' surplus.
5. Suppose food (F) and clothing (C) are produced using only labor. The production functions are given by: F = (LF)0.5 C = 0.5(Lc)0.5 Where LF is labor devoted to food production and Lc is labor devoted to clothing production. Labor supply is fixed at 100. Suppose society's preferences can be represented by: U(F,C) = (FC)0.5 Solve for the equilibrium outputs of food and clothing and for the relative price of food (PF/ Pc). LF + Lc = 100
The task I am struggling with: Determine the supply and demand function and the equilibrium point.Graph the results.Demand. If a given product is priced at $7 per unit, there is a demand for 4 units;if a given product is priced at $6 per unit, there is a demand for 8 units.Supply. If a given product is priced at $9 per unit, suppliers are willing to produce4 units; if a given product is priced at $23 per unit, suppliers are willing toproduce 12 units. Thank you very much.
Use the concept of diminishing marginal utility to explain the slope of a demand function. Use the concept of diminishing marginal productivity to explain the slope of a supply function.
Question 1 Tom is trying to figure out how to supplement his student bursary of £200 per week. He is considering a part-time job at a restaurant. The wage is £8 per hour. His utility function is U(C, L) = C ·L where C is his consumption measured in £ per week and L his leisure, measured in hours per week. The amount of leisure time that he has left after allowing for necessary academic activities is 50 hours a week. 1. Write out Tom's budget constraint and calculate the maximum value (i.e. he works the maximum time available) and minimum value? 2. Using your results from part 1, draw Tom's budget set (horizontal axis: leisure and vertical axis: consumption). 3. Let Y = student bursary, T = total amount of leisure time and w =wage. Set up the maximisation problem and calculate optimal consumption demand and leisure as a function of his student bursary and wage. 4. For the values given in the question, work out the value for optimal leisure hours and consumption spending L" and C*. 5.…
Assume that sugar-based soft drinks are produced in a market shown on the graph above. Answer the following questions based on the information given in the graph. (a) To reduce the consumption of sugary soft drinks, suppose the government imposes a $2 per-unit sales tax on soft drinks. (i) Will the price of soft drinks increase by the full amount of the sales tax? Explain. (ii) Calculate the tax revenue the government can collect from the sale of soft drinks. Show your work. (iii) Will the consumer surplus increase, decrease, or stay the same after the tax? (iv) Calculate the deadweight loss created by the tax. Show your work. (b) Suppose that instead of imposing the per-unit sales tax, the government sets a price ceiling of $7. Identify the quantity of soft drinks that will be exchanged in the market as a result of the price ceiling. Explain.
Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. PRICE (Dollars per room) 500 450 400 350 300 250 200 150 100 50 0 Demand 0 50 100 150 200 250 300 350 400 450 500 QUANTITY (Hotel rooms) Graph Input Tool Market for Lakes's Hotel Rooms Price (Dollars per room) Quantity Demanded (Hotel rooms per night) Demand Factors Average Income (Thousands of dollars) Airfare from MSY to ACY (Dollars per roundtrip) Room Rate at Mountaineer (Dollars per night) 100 400 40 100 250 ? For each of the following scenarios, begin by assuming that all demand factors are set to their original values and Lakes is charging $100 per room per night. If average household income increases by 25%, from $40,000 to $50,000 per year, the quantity of rooms demanded at the Lakes from rooms per night to rooms per night. Therefore, the income elasticity of demand is , meaning that hotel rooms at the Lakes are If the price of a room at the…
1) Sharon spends her time (20h) between leisure (L) and work and he consume Y product from his working income (Py=1). Assume that she gets W$ per hour of working and has the following utility function: U (L, Y)=LY+2L a. b. C. Calculate the demand function for L and show it on a graph (L vs W). Calculate the labor supply (H) and show it on a graph (H vs W). What will happen to L, Y and H if the wage per hour (W) will decrease? =