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
Economics- Definition Economics is the study of how societies utilize limited resources to make valuable commodities and allocate them among diverse people. Microeconomics h

Isoquants * Assumptions - Food producer has 2 inputs Labor (L) & Capital (K) * Observations:  1) For any level of K, output increases with L.  2) For any

What are the keys of the profit maximisation in production technology? Profit Maximization in production technology: a. Producer Behavior b. Producer’s Optimal Choice

illustrate and discuss the implications of various markets structures(competitive and non-competitive) for price dertimation

Suppose scientists discover that eating soybeans prevents cancer and heart disease

function with equation,variable,parameter

Will Governments Follow Good Policies? That governments can assist in development and growth doesn't mean that governments will. The broad experience of growth in developing ec

differentiate between normative and positive statements in economics with the help of a statement

National Budget: A National Budget is a document showing estimates of expected government revenue and intended expenditure for the coming financial year. It usually consist of

Liberalisation of the Economy: Removal of Industrial Licensing: All industrial licensing was abolished but for a shortlist of 18 industries related to security and strategic