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Consider an industry with a sole producer, a monopolist. The latter faces cost function C(Q)= Q/2 and aggregate (inverse) demand P(Q)=1 - Q (zero for Q> 1). Illustrate all your answers in a drawing
(a) What are the equilibrium quantity QM, price PM, pro?ts ΠM, consumer surplus CSM and total welfare WM for the case of non-discriminatory (uniform) pricing.
(b) Explain why for effciency, i. e. maximal total welfare, it must be the case that price equals marginal cost. Using this, compute the effcient quantity Q*.
(c) Finally, quantify the social cost arising from the monopoly by calculating the associated deadweight loss, telling you by how much the monopoly industry falls short of effciency.
Using the discounting principle calculate the present value of an annuity of five years at Rs. 500 payments made at the end of each of the next five years at 10% interest. stion..
PROGRESSIVE TAX A progressive income tax system is one where the higher the income, the greater the proportion paid in taxes. This is effected by dividing the taxpayers' inco
Direct control and Moral Suasion Without actually using the above weapons, the central bank can attempt simply to use "moral suasion" to persuade the commercial banks to restr
CLASSIFICATION OF TAXES Taxes can be classified on the basis of: a. Impact of the taxes It means on whom the tax is imposed. On the other hand, incidence of the
Write on one theory of profit. Profit as rent of ability: one of the most widely known theories of profit was propounded by F.A. Walker. According to him profit is the rent of is t
Ask questiHow does economic theory contribute to managerial decisions? on #Minimum 100 words accepted#
Profit as rent of ability: one of the most widely known theories of profit was propounded by F.A. Walker. According to him profit is the rent of is the difference between the earn
Opportunity cost is cost of a different that must be forgone in order to pursue a definite action. Put another way, the advantages you could have received by taking an alternative
1. Prof. Thomas "Generally the term Monopoly is used to cover any effective price control, whether of demand or supply of services or goods; hardly it is used to mean a combination
Using the same simple macro model we developed in Module 2: a. Show what will happen to national income (GDP) if the administration implements another $100 (billion) stimulus s
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