2. A firm is operated under monopoly where there are two groups of customers. The market demand from group 1 is given by Q1 = 80 – P. The market demand from group 2 is given by Q2 = 40 – P/2. The firm’s marginal cost function is given by MC =20.
a. Total market demand is given by Q= Q1 + Q2 = 120 – 3P/2. Find the firm’s producer surplus from combining the two markets and set a single optimal price.
b. Find the firm’s total producer surplus from separating the two markets (third degree price discrimination.
c. Use price elasticity of each demand function to explain why the third-degree price discrimination in b. cannot increase the firm’s producer surplus
In: Economics
A semiprofessional baseball team near your town plays two home games each month at the local baseball park. The team splits the concessions 50/50 with the city but keeps all the revenue from ticket sales. The city charges the team $500 each month for the three-month season. The team pays the players and manager a total of $2500 each month. The team charges $10 for each ticket, and the average customer spends $7 at the concession stand. Attendance averages 100 people at each home game.
Part 1. The team earns an average of $________________ in
revenue for each game and $______________ of revenue each
season.
With total costs of $_____________ each season, the team finishes
the season with $________________ of profit.
Part 2 In order to break even, the team needs to sell tickets for each game. Round to the nearest whole number.
In: Economics
The Federal Reserve System was established to provide a stable monetary system for the entire economy. The Federal Reserve Bank (the Fed) has three major tools to control the money supply: 1) reserve requirements, 2) discount window for loans to member banks, and 3) open market operations.
When the economy is in a recessionary mode, what will likely be the actions by the Federal Reserve using monetary policy? Suppose the Federal Reserve purchases a $100,000 bond from John Doe, who deposits the proceeds in the Manufacturer's National Bank; what will be the impact of this transaction on the supply of money?
How do each of the Fed's tools work? What is the fractional reserve system, and how does it work in relation to the Fed? Review the Federal Reserve System and how the Fed alters the monetary base to achieve the levels of money supply in the economy.
In: Economics
Comment on Robert D. Behn and James W. Vaupel’s quote on values reprinted in the text: “Decisions depend upon judgments—judgments about the nature of the dilemma, the probabilities of events, and the desirability of consequences. Decision-making is inherently subjective.” What do you think about this idea that decisions are subjective? Can you give an example of how you have witnessed your government make a decision that seemed more subjective than objective? How does that make you feel that the subjectivity of administrators is at work in their decision-making? How do the different approaches to decision-making treat “values,” and which ones seem more value driven than others?
In: Economics
If we accept that the marketplace is the regulator for those industries where there is no monopoly, do you think that the marketplace makes the same decisions as a regulator? Why or why not? What objectives would a regulator who is regulating a natural monopoly pursue? Are these the best goals? Why or why not?
In: Economics
As the owner of the only tennis club in an isolated wealthy community, you must decide on membership dues and fees for court time. There are two types of tennis players. "Serious" players have demand
Q1=12−P
where Q1 is court hours per week and P is the fee per hour for each individual player. There are also "occasional" players with demand
Q2=4−0.25P
Assume that there are1,000 players of each type. Because you have plenty of courts, the marginal cost of court time is $0.
You have fixed costs of $12,000 per week. Serious and occasional players look alike, so you must charge them the same prices.
a. Suppose that to maintain a "professional" atmosphere, you want to limit membership to serious players. How should you set the annual membership dues and court fees (assume 52 weeks per year) to maximize profits, keeping in mind the constraint that only serious players choose to join? What would profits be (per week)? (round your answers to two decimal places)
The annual membership fee is:
The court fee is:
Weekly profit is:
b. A friend tells you that you could make greater profits by encouraging both types of players to join. Is your friend right? What annual dues and court fees would maximize weekly profits? What would these profits be? (round your answers to two decimal places)
The annual membership fee is:
The court fee is:
Weekly profit is:
c. Suppose that over the years, young, upwardly mobile professionals move to your community, all of whom are serious players. You believe there are now 3500 serious players and 1000 occasional players. Would it still be profitable to cater to the occasional player? What would be the profit-maximizing annual dues and court fees? What would profits be per week? (round your answers to two decimal places)
The annual membership fee is:
The court fee is:
Weekly profit is:
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4. Explain the concept of bailment. Describe the obligations of the bailor and the bailee and the distinguish voluntary and involuntary bailment. Give an example of a bailment for value
In: Economics
In: Economics
Explain ethnocentric and polycentric orientation and show the
differences between them support your answer with examples Giving
examples
In: Economics
uestion 322 pts
The profit-maximizing rule MR = MC is:
Group of answer choices
followed by a perfectly competitive firm but not by a monopoly
followed by a monopoly but not by a perfectly competitive firm
followed by all types of firms
not followed by a monopoly because it would reduce economic profit to zero
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Question 332 pts
The shape of the marginal cost curve (MC) is driven by:
Group of answer choices
Diminishing returns
Diminishing returns, then specialization
Specialization
Specialization, then diminishing returns
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Question 342 pts
Many customers will walk right past a diner that serves coffee and go to Starbucks, where they pay more for a cup of coffee. For these customers, cups of coffee are differentiated by:
Group of answer choices
location
style
quality
type
In: Economics
A monopolistically competitive firm has excess capacity in the long run. This means that it:
Group of answer choices
produces less than the output at which average total costs are minimized.
could produce more by moving to a larger plant.
produces less than the output at which price and marginal cost are equal.
doesn't maximize profits.
Question 22 pts
If two firms are identical in all respects except that one has more capital than another, the total product curve for the firm with more capital:
Group of answer choices
must equal the total product curve for the firm with less capital
will show no diminishing marginal returns
will lie above the total product curve for the firm with less capital
will lie below the total product curve for the firm with less capital
Question 32
Suppose that the market for haircuts in a community is perfectly competitive and that the market is initially in long-run equilibrium. Subsequently, a decrease in population decreases the demand for haircuts. In the short run, we expect that the market price will ________ and the output of a typical firm will ________.
Group of answer choices
rise; fall
rise; rise
fall; fall
fall; rise
In: Economics
Bond dealers buy and sell bonds at very low spreads (A spread is the difference between the price someone is willing to pay for a good and the price they are willing to sell the good). Used car dealers buy and sell cars at very wide spreads. Recall that the strong form implies prices incorporate private information. What are the potential sources of private information in the bond market versus the used car market? How can these differences explain the differences in the width of the spreads in the two markets?
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Suppose Amjad’s preferences for pants and shirts are represented by: U(x1,x2 )=x1^2 x2^3, and he faces a linear
budget constraint, 2x1+ x2=50. Given that the price of good 1 increases to 4, what are (1) the compensating and (2)
equivalent variations? You must set up the Lagrangian and derive the demand functions for this question. Be sure
to clearly identify which prices, old or new, are used to derive the values for EV vs. CV, and which utility, old or new,
is used to derive EV vs. CV.
In: Economics
Think about these three major ideas of the Enlightenment: 1) Political - Locke and Rousseau -Government by contract between the people and the rulers and popular sovereignty – i.e. inviolable constitutions are contracts and 2) Economic - Adam Smith – freedom to pursue individual economic self-interests benefits all of society – i.e. free-market capitalism. 3) Social - Jefferson - All people created equal and freedom is a natural right. Remember that these ideas (three key premises of 19th century liberalism dating to the Enlightenment) share the stage with nationalism, imperialism, and industrialization.
Remember that LIBERALISM is the most direct descendant of the ideas of the Enlightenment.
Answer the following questions for the 1800s: (If you have examined and completed the notes, you will not have a problem answering these questions.)
Generally, considering the liberal reform efforts of 1) western Europe, 2) the US, 3) Canada, 4) Latin America, 5) the Ottoman Empire, 6) Russia, 7) China, 8) Japan, and 9) Africa, think about which nations/regions were able to implement real and long-lasting political, social, and economic reform during the1800s based on the ideas of Locke, Rousseau, and Smith as described above?
Answer the following:
1) Name one country/region (from the list above) that successfully established REAL and LASTING liberal reforms (not just on paper). ______________________ (Think results) 10pts.
2) In one sentence, provide one example OF THIS SUCCESS to justify your answer. Be specific. (They did good things for the people is not a specific answer..... Who did? What people? What good did they do politically, socially, or economically...?) 40pts.
3) Name one country/region (from the list above) that failed to implement REAL and LASTING liberal reforms. _______________________ (Think results) 10pts.
4) In one sentence, provide one example to justify your answer. Be specific. (It caused an economic or political crisis is not a specific answer..... What or who caused? What happen to the economy? What happened politically? Who suffered? ) 40pts.
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Describe Keynes's policies to promote full employment and stability.
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