Question
In: Economics
Two flatmates Matt and Ryan are deciding how to best furnish their house. Furniture costs $100...
Two flatmates Matt and Ryan are deciding how to best furnish their house. Furniture costs $100 per unit and can be considered both non-excludable and non-rival once purchased. They have the following demand curves: Matt: P=180-15Q Ryan: P=120-10Q [8 marks]
A. Suppose that Matt and Ryan cannot come to an agreement to share the cost of furniture. What will be the deadweight loss associated with competitive market outcome? Calculate the surplus for Ryan in the competitive market outcome. [2 marks]
B. Use the Samuelson condition to determine the efficient provision of this public good. What is the socially optimal price and quantity? [2 marks] Knowing that Ryan is going to free ride of his provision for furniture Matt decides it would be better to just move in elsewhere. So, Liam decides to move in with Ryan instead. Liam has exactly the same individual demand curve as Ryan. Page 10 of 11
C. Suppose that Liam and Ryan cannot come to an agreement to share the cost of the furniture. Calculate the surplus for Ryan in the competitive market outcome. [2marks]
D. How has Ryan’s surplus changed relative to the previous part of the question? What is the reason for this change? Explain your answer. [2 marks] 5. Suppose that Trevor is a resident of The Bad Place who enjoys hosting loud parti
Solutions
Rahul Sunny answered 2 years agoRelated Solutions
M3_IND1. A furniture cabinet maker produces two types of cabinets, Classic and Modern, that house and...
M3_IND1. A furniture cabinet maker produces two types of
cabinets, Classic and Modern, that house and hide LCD TVs. The
resource requirements and profit for the two types of cabinets are
shown below.
Resource Requirements and Profitability Model Materials ($/unit)
Labor (hrs./unit) Profit ($/unit)
material($units) labor(Hours/units)
profits($/units)
Classic 800 12 350
Modern 600 4 250
The firm has a budget of $185,000 to spend on materials. The
firm has 2,000 labor hours are available...
A.) A firm is deciding between two different sewing machines. Technology A has fixed costs of...
A.) A firm is deciding between two different sewing machines.
Technology A has fixed costs of $500 and average variable costs of
$50 whereas Technology B has fixed costs of $250 and marginal costs
of $100.
The quantity of output at which the firm is
indifferent between the two technologies is ______
B.) A firm is deciding between two different sewing machines.
Technology A has fixed costs of $500 and average variable costs of
$50 whereas Technology B has fixed costs...
Which of the following costs would be considered relevant when deciding between two products to produce?...
Which of the following costs would be considered relevant when
deciding between two products to produce? Select one: A. Level of
direct materials required B. Additional investment in factory
equipment for one product C. Amount of additional direct and
indirect labor D. The opportunity cost associated with one or the
other product E. All of the above In the decision to make or buy a
new component, if a company is producing at full capacity then the
only factors that...
Suppose you are deciding how to invest $2,000. There are two options: shares in an airline...
Suppose you are deciding how to invest $2,000. There are
two
options: shares in an airline company and shares in a petroleum
company. There is a 0.25
probability that oil prices will go up, a 0.25 probability that
prices will go down, and a 0.50
percent probability they will remain the same. The value of each
$100 invested after prices
adjust is as follows:
Event
Probability
Airline
Oil Company
prices fall
0.25
$120
$70
prices same
0.50
$105
$110
prices...
philosophy 100 Vogel’s inference to the Best Explanation for belief in the External World? How does...
philosophy 100
Vogel’s inference to the Best Explanation for belief in the
External World?
How does Vogel's argument work?
When a firm is deciding how much cash to distribute to stockholders, it should consider two...
When a firm is deciding how much cash to distribute to
stockholders, it should consider two things: (1) The overriding
objective is to maximize shareholder value and (2) the firm's cash
flows belong to shareholders, so income shouldn't be retained
unless management can reinvest those earnings at higher rates of
return than shareholders can earn themselves. The
model sets the distribution paid equal to net income minus the
amount of retained earnings necessary to finance the firm's optimal
capital budget....
When a firm is deciding how much cash to distribute to stockholders, it should consider two...
When a firm is deciding how much cash to distribute to
stockholders, it should consider two things: (1) The overriding
objective is to maximize shareholder value and (2) the firm's cash
flows belong to shareholders, so income shouldn't be retained
unless management can reinvest those earnings at higher rates of
return than shareholders can earn themselves. The-Select-capital
budgetingcapital structureresidual distributionItem 1 model sets
the distribution paid equal to net income minus the amount of
retained earnings necessary to finance the...
When a firm is deciding how much cash to distribute to stockholders, it should consider two...
When a firm is deciding how much cash to distribute to
stockholders, it should consider two things: (1) The overriding
objective is to maximize shareholder value and (2) the firm's cash
flows belong to shareholders, so income shouldn't be retained
unless management can reinvest those earnings at higher rates of
return than shareholders can earn themselves. The model sets the
distribution paid equal to net income minus the amount of retained
earnings necessary to finance the firm's optimal capital budget....
Fab Furniture has two manufacturing departments--Cutting and Finishing. It considers all of its manufacturing overhead costs...
Fab Furniture has two manufacturing departments--Cutting and
Finishing. It considers all of its manufacturing overhead costs to
be fixed costs. The overhead estimates for the year and for one job
(Order #75675) completed during the year are shown below.
Estimated Data
Cutting
Finishing
Total
Manufacturing overhead costs
$
6,210,000
$
6,750,000
$
12,960,000
Direct labor-hours
135,000
81,000
216,000
Machine-hours
54,000
270,000
324,000
Order # 75675
Cutting
Finishing
Total
Direct labor-hours
28
20
48
Machine-hours
20
23
43
Required:
1. Calculate...
1. Calculate how much money a prospective homeowner would need for closing costs on a house...
1. Calculate how much money a prospective homeowner would need
for closing costs on a house that costs $117,100. Calculate based
on a 15 percent down payment, 1.8 discount points on the loan, a
1.1 point one origination fee, and $1,320 in other fees.
The closing cost would be $:
2. Determine the maximum 30-year fixed-rate mortgage amount for
which a couple could qualify if the rate is 6.68 percent. Assume
they have other debt payments totaling $439 per month...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- A conductive sphere with radius ? = 1 ? has been increased to the potential ?0...
- Define a char variable. Read a char value from the keyboard into the variable. Print the...
- If you wanted to store a birthday within code, what class would you use in Java?...
- Explain what is meant by the Theme Park internal and external business environment and use the...
- Description Write a program that prints out your name, the course ID of this class, what...
- A project has an initial cost of $65,475, expected net cash inflows of $12,000 per year...
- Make a program that lets the user enter a positive or negative integer as many times...
ADVERTISEMENT