Economics questions and answers

Assignment Help Macroeconomics
Reference no: EM13696599

 1.      (4 points) Pecanpie demand.  Your friend Helen B. Carter has left school to open a bakery.  She has done some market research and finds that your neighbors value pies according to the following schedule:

 

Pecan pie

MU

1

 $40.00

2

 $36.00

3

 $32.40

4

 $29.16

5

 $26.24

6

 $23.62

7

 $21.26

8

 $19.13

9

 $17.22

10

 $15.50

11

 $13.95

12

 $12.55

13

 $11.30

14

 $10.17

 

a.       (2 points) Graph the demand curve for pecan pie.  Does the demand curve have a positive or negative slope?  Why?

 b.       (1 point) How many pies will Helen sell at $19.13?  How many at $29.16?

 c.       (1 point)  What will happen if a new doctor comes to town and tells everyone to lose weight?  What will happen if people learn that Helen makes really delicious pies? 

 2.      (4 points) Production.  Helen makes pies using equipment that she rents for $50andpecans and other ingredients that cost $4.66 a pie.  She hires workers and finds that they produce pies according to the following schedule:

 

Pies

Workers

1

0.25

2

0.58

3

1.02

4

1.61

5

2.40

6

3.44

7

4.82

8

6.66

9

9.11

10

12.36

11

16.69

12

22.45

13

30.11

14

40.30

 

 

            Workers are paid $12/hour.

 

a.       (2 points) Calculate and graph the marginal cost of each pie.  Show your calculations! Why does the MC curve have the slope (up, down, or flat) that it does?

b.      (2 points) Calculate and graph the marginal cost of each pie if workers become 25% more productive, that is to say, if each pie can be made with only 75% as much labor.  Show your calculations! Calculate and graph marginal cost if workers get a raise to $18/hour, with the old productivity.

 

3.       (4 points) Perfect competition and equilibrium. 

a.       (1 point) Put the demand and supply curves together (at the original productivity and wages).  Helen assumes that she is in a perfectly competitive market.  How many pies will she sell?  At what price?

b.      (1 point) Draw the area of consumer surplus on your graph.  Draw the area of producer surplus.

c.       (2 points) Calculate consumer surplus as the sum of the difference between the price and the marginal utility for each pie.  Calculate producer surplus as the sum of the difference between price and marginal cost for each pie.

 

4.      (6 points) Monopoly and equilibrium

a.       (2 points) Helen gets smart and realizes that she is the only pie shop around.  Calculate the marginal revenue she gets for each additional sale as the change in total revenue (price times sales).  Graph this and show the new quantity of sales and the new price.

 

b.      (1 point) Draw the area of consumer surplus on your graph.  Draw the area of producer surplus.

c.       (2 points) Calculate consumer surplus as the sum of the difference between the price and the marginal utility for each pie.  Calculate producer surplus as the sum of the difference between price and marginal cost for each pie. 

d.      (1 point) Compare the sum of consumer and producer surplus for the monopoly with the results for perfect competition.  Which is better for consumers?  Which is better for producers?  Which is better for society?

 

5.      (2 points) Moving Equilibrium.  Show the effect of each on the monopoly market equilibrium; you don’t need to have exact answers but explain the direction of change in the demand and/or marginal cost curves.

a.       (0.5 points) Pecan prices rise..

b.      (0.5 points) Helen gets her oven for free. 

c.       (0.5 points) More people see Sweeney Todd and are scared of pie shops. 

 

d.      (0.5 points) More people see Sweeney Todd and more people are curious about Helen’s pies.

Reference no: EM13696599

Questions Cloud

Benefit from lowering their corporate income taxes globally : Companies can benefit from lowering their corporate income taxes globally. Explain how Apple has done this and how some US pharmaceutical companies are using M&A to achieve similar results. Do you think this is unethical or unpatriotic?
Risk exists when : Risk exists when
Price matching is a strategic move : Price matching is a strategic move that
To successfully practice price discrimination : To successfully practice price discrimination
Economics questions and answers : Moving Equilibrium.  Show the effect of each on the monopoly market equilibrium; you don’t need to have exact answers but explain the direction of change in the demand and/or marginal cost curves.
Eco questions answers : However, because the market is so new, reputations for quality have not yet developed, and consumers cannot tell the quality difference between an Ajax digital and a Knockoff digital just by looking at them.
The growth of consumer information organizations : The growth of consumer information organizations, legal requirements, and warranty requirements has caused significant increases in the cost of customer satisfaction.
Journalize the entry to record the inception : Journalize the entry to record the inception of each of the three notes and also journalize a single adjusting entry at December 31, 2014, the fiscal year-end, to
Using ohs examples describe the differences : Using OHS examples describe the differences between; precision accuracy variability reliability and validity

Reviews

Write a Review

 

Macroeconomics Questions & Answers

  What equal annual deposits must be made at

What equal annual deposits must be made at t=2,3,4,5,8,9 and in 10 in order to accumulate $40,000 at t=15 if money is worth 10% compounded annually?

  Can friendly finance succeed in a suit against suburban

Evergreen Landscapers, Inc., owes Friendly Finance Company $5,000. Evergreen enters into a contract with Suburban Office Park under which Evergreen promises to maintain the landscaping on Suburban's property.

  Conversation on the theory of consumer

Explain her change in consumption in terms of income and substitution effects (give a precise quantitative answer). Is this a Griffin good (how do you know)?

  1 for each of the following changes show the effect on

1 for each of the following changes show the effect on the supply curve and state what will happen to market

  Question about gross domestic product

Suppose that the economy is already in a recession, and both President and Congress have decided to do something to restore the economy.

  What is the maximum amount of new loans

What is the maximum amount of new loans that this bank can make and assume that the bank makes these loans. What will the new balance sheet look like?

  How bank makes loans only up to the level of excess reserves

In a multibank system, an individual bank makes loans only up to the level of its excess reserves, while the whole commercial banking system can lend out money that is a multiple of the original bank's excess reserves. Why is there this difference..

  What does it mean to have market power

A clinic finds that by eliminating appointments it can reduce costs. The clinic is able to eliminate some telephone staff, and physicians become more productive. Patients wait until the physician is available, so there is virtually no down time. D..

  Using the utility functionu x y xgamma ygamma 0 lt gamma

using the utility functionu x y xgamma ygamma 0 lt gamma lt 1a find income and substitution effects.b does the

  Own price elasticity and cross price elasticity

Let the market demand for rye bread be given by  Q = 500 + I - 250P rye + 400P wheat , where Q is monthly demand in number of loaves, I is average monthly income in dollars

  How many sets does venezuela produce

Suppose venezuela imports TV sets at a price of $150 each. Under free trade, how many sets does Venezuela produce, consume, and import?

  What happened to producer surplus in the market

Suppose that last year the equilibrium price and the quantity of good X were $20 and $10 million pounds. Because of strong demand this year equilibrium price and quantity of good X are $30 and 15 million pounds. Assuming that the supply curve of g..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd