tut10, Microeconomics

3. You plan to sell a sunglasses clip that you can attach to a car''s sun visor. You can purchase the goods from a wholesaler at $2 a piece and there is an overhead cost of $500 per week. The amount you sell depends on how hard you work. Specifically, the amount you sell per week will be 20 times the number of hours you put in per week. Your opportunity cost of the first 10 hours is $200. It is $300 for the next 10 hours, $500 for the next 10, and $800 for the next 10 hours.
(a) Construct your supply curve for the sunglasses clips.
(b) If you can sell these in a competitive market at $5 per clip, then how many will you sell?
(c) If the market is perfectly competitive in the long run, what will happen to the price and your profit over time?
(d) Argue that a price of $4.50 could be part of a long run competitive equilibrium.



4. Suppose that the government requires beer drinkers to pay a tax of $2 on each carton of beer purchased.

(a) Draw a supply and demand diagram of the market for beer without the tax. Show the price paid by consumers, the price received by producers and the quantity of beer sold. What is the difference between the price paid by consumers and the price received by producers?

(b)Now draw a supply and demand diagram of the market for beer with the tax. Show the price paid by consumers, the price received by producers and the quantity of beer sold. What is the difference between the price paid by consumers and the price received by producers? Would your answer change if the tax was imposed on producers instead?



5. You find from your accountants that the marginal cost of production is constant at $35 per unit if you sell up to 100 units, then it falls to $30 per unit for between 101 and 150 units. Between 151 and 200 units the marginal cost is only $20. For more than 200 units, the marginal cost will be at least $40 per unit.


(a) If you sell in a competitive market at a price of $28, then how much will you produce to maximise your profit?

6. Suppose there are two roommates, 1 and 2. They are trying to decide whether or not to purchase a TV. Given the size of their apartment, the TV will necessarily go in the living room, and both roommates will be able to watch it. Thus, there is no way for one of the roommates to exclude the other from watching the TV. Assume that each roommate has a wealth of $500, and that each person values the TV at $100, and that the cost of the TV is $150. Also suppose that each roommate will decide independently whether or not to buy the TV.

(a) Write this situation as a game where the choices for each roommate are to buy or not buy the TV.

(b) Find the Nash equilibrium.

(c) Can they do better than the Nash equilibrium?
Posted Date: 3/29/2013 12:45:08 AM | Location : Australia







Related Discussions:- tut10, Assignment Help, Ask Question on tut10, Get Answer, Expert's Help, tut10 Discussions

Write discussion on tut10
Your posts are moderated
Related Questions
It is necessary for the proper understanding of the price theory to know the various concepts of cost that are often employed. When an entrepreneur undertakes production of a commo

How does production possibility curve help solve central problems?

Profits University creates student credit hours (y) with two inputs: Professors' hours of work (x1) and TAs' hours of work (x2) according to the manufacture function: f(x1,x2)= 10x

Slope of an Iso-quant: Since along an iso-quant the level of output remains the same, if θL units of θL are substituted for K units of K, the increase in output due to θ L

Chapter 13 / PERFECT COMPETITION and THE SUPPLY CURVE 1. Joe Brown’s dairy operates in a perfectly competitive marketplace. Joe’s machinery costs $500 per day and is the only fixe

Workers' Co-operative: Another form of privatisation is transfer ofownership of a loss-making concern to the workers. Mr. R. Ganpati, formerChairman of the Board of Industria

1. On Wednesday the 16 th , 2008 an enormous avalanche knocked out the lines that transmitted electricity from a hydroelectric dam to Juneau, Alaska. This eliminated Juneau's prima

How to find quantity supplied given just the price

explain the relationship between scarcity,choice and opportunity cost

Vulnerability in international relations: Dominance, dependence and vulnerability in international relations.A greater volume of Ghana’s exports comes from primary commodities