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The total cost (TCZ) of the De Beers Company (a monopolist) is given by TCZ = 100 + 50QZ + 0.5Q2Z where QZ is the number of diamonds produced and put on the market by the De Beers Company. Suppose the government could force De Beers to behave as if it were a perfect competitor— that is, via regulation, force the firm to price diamonds at marginal cost. a. What is social welfare when De Beers acts as a single- price monopolist? (Note: Social welfare is the sum of consumer and producer welfare. It might be easier to graph the problem so that you can visualize the surpluses areas) b. What is social welfare when De Beers acts as a perfect competitor?. c. How much does social welfare increase when De Beers moves from monopoly to competition?
Illustrate what additional information is needed for you to be able to compute the price elasticity of demand for DVD players.
In the long run, there will be no unexploited scale economies (excess capacity) in
What effects would each of the following have on aggregate demand or aggregate supply, other things equal? In each case use a diagram to show the expected effects on the equilibrium price level and the level of real output, assuming that the price le..
The student could also have earned $15,000 by getting a job instead of attending college and 10 percent interest on expenses he or she incurs at the beginning of the year. Calculate the explicit, implicit, and the total economic costs of attending..
When an incumbent maintains a price below the monopoly price in order to prevent entry. The act of charging a low price initially upon entering a market to gain market share.
how to compute implicit explcit and opportunity costs. jamal has a flexible job. he can work everyday but is allowed to take a day off anytime he wants.
A product that sells today for $100 per unit is expected to escalate in price by 6% in year one, 8% in year two and 10% in year three. Calculate the escalated dollar year three product selling price. If inflation is expected to be 5% in year one, 9% ..
Would a typical hedger be willing to pay a risk premium in order to hedge by buying foreign currency forward.
Suppose that currency in circulation is $500 billion, the amount of checkable deposits is $1,000 billion, excess reserves are $150 billion, and the required reserve ratio on checkable deposits is 10%. Calculate the money supply, the monetary base, th..
Read the instructions in the University of Phoenix Material: Differentiating Between Market Structures located on the student website and select one option to complete the assignment.
Using the IS-MP diagram, explain what happens to the economy if there is a temporary consumption boom that lasts for one period. Initially, suppose the FED keeps nominal interest rate unchanged. Now suppose you were the chairman of the FED. What acti..
The entry of low-cost carriers into commercial aviation had a legacy of factors - both environmental and operational - that contributed to their business models. If the Airline Deregulation Act of 1978 helped them scale their operations, their 'no-fr..
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