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The residents of the town Ectenia all love economics, and the mayor proposes building an economics museum. The museum has a fixed cost of $2,400,000 and no variable costs. There are 100,000 town residents, and each has the same demand for museum visits: Qd = -P, where P is the price of admission. a.) Graph the museum's average-total-cost curve and its marginal-cost curve. What kind of market would describe the museum? b.) The mayor proposes financing the museum with a lump-sum tax of $24 and then opening the museum to the public for free. How many times would each person visit? Calculate the benefit each person would get from the museum, measured as consumer surplus minus the new tax. c.) The mayor's antitax opponent says the museum should finance itself by charging a admission fee. What is the lowest price the museum can charge without incurring losses? (hint: Find the number of visits and museum profits for prices of $2, $3, $4, $5.) d.) For the break-even price you found in part (c), calculate each resident's consumer surplus. Compared with the mayor's plan, who is worse off? Explain. e.) What real-world considerations absent in the problem above might provide reasons to favor an admission fee?
Grow Fertilizers Company purchases a gravity settling tank of the $50,000 purchase price. The company finance 50% of the investment with a loan to be repaid with eight equal semi annual principal payments plus interest of the balance at an annual int..
Using the formula and information given, first calculate the Q Q = -5,200 – 42(500) + 20(600) + 5.2(5,500) + 0.20(10,000) + 0.25(5,000) = Now we can compute the elasticities for each independent variable: ED = ∂QD/∂P * P/QD = – 42 * 500/Q (what you c..
How would the following circumstances affect workers’ ability to earn higher wages by forming a labor union? Do these conditions increase the union wage premium, decrease it, leave it unchanged, or is the effect ambiguous?
Consider the following cash flow. Determine the annual worth if the minimum attractive rate of return is 9% per year.
Assignment on The Net Exports Effect
Would you rather receive $100 today or $120 in one year? b Would you rather receive $205 today or $240 in one year? c Would you rather receive $500 in one year or $610 in two years?
Your pension will pay approximately £6,000 a year British government 20-year bonds yield 2.6%. You are offered a lump sum in return for a waiver on annual payments. How much should you ask for?
Elucidate how much consumer surplus would be created by randomly assigning buyer to sellers. Which method gives the larger surplus.
Suppose that the government decreases spending by $100 billion. What happens to aggregate demand? What is the likely effect on prices and output? Where are the new equilibrium price level and GDP relative to the old levels?
A local community voting to raise property taxes to increase school expenditures
Using demand and supply analyst briefly discuss the effect of each of the following on the market for cigarettes: a cure for lung cancer is found b). The price of cigars increases. c.) Wages increase substantially in states that grow tobacco. d.) A f..
What do economists mean when they say that "price floors and ceilings stifle the rationing function of prices and distort resource allocation" Use the ideas of consumer surplus and producer surplus
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