A barber shop offers haircuts to both students and faculty. Student demand for haircuts is given by pS(QS) = 24− 1QS. Faculty demand for haircuts is given by pF(QF) = 24− 1QF.

Students have more hair than professors (even the young professors), and longer hair costs more to cut. Reflecting this fact, the barber shop’s total costs are

C(QS,QF)=16QS +10QF
Suppose first that the barber shop can engage in perfect price discrimination.

1. (3 pts.) How many students get haircuts (Q∗S )? How many faculty get haircuts (Q∗F )? How much profit will the barber shop make?

2. (3 pts.) Under perfect price discrimination, is each of these statements true or false? Briefly explain your reasoning.

   i. Every faculty member with positive willingness to pay ends up getting a haircut. ii. Among the people who get haircuts, students pay more than faculty on average.

   iii. The cheapest haircut sold is sold to a faculty member

Now suppose that the barbershop cannot engage in personalized pricing. However, it is able to offer one price for students and a different price for faculty.

c. (3 pts.) Find the monopoly’s profit-maximizing prices p∗S and p∗F under group price discrimination. Which group is charged a bigger price markup?

Upset about discriminatory prices, student groups organize protests against the barber shop, using the catchy slogan “It’s unfair / to tax our hair!” The protests go viral, and the barber shop reluctantly agrees to charge everybody the same price, regardless of cost.

d. (3 pts.) Compute the market demand curve Q(p), then write the barber shop’s profits as a function of p. (Be careful with the costs!) What price will the barber shop charge?

For this week's discussion, come up with and discuss two examples of government intervention in the economy. One of them has to be an example that you consider good intervention and the other should be an example of what you consider bad intervention in the economy. There is no right or wrong answer for this one. Please be aware that you should also comment on at least of your classmates' postings, but you must be polite and respectful. Rude and disrespectful comments will not be tolerated.

15.5. Consider a bundling problem where the principal is the seller of a good with a value function v = t − 2 q where t is the price charged for a bundle and 2 q is the cost of the bundle that contains q units of the √ good. A buyer of type θ has a utility function u ( q , t ) = θ q − t , where θ is either 16 or 20 with probability 0.5 each. The buyers reservation utility is zero. (a) (b) Calculate the optimal bundles, ( q L formation. Calculate the optimal bundles, ( q ∗ L information. , t ˆ L ) and ( q ˆ H , t ∗ L , ˆ t H ) , under full inˆ ) and ( q ∗ H , t ∗ H ) , under asymmetric

1. Assuming the typical sacrifice ratio given in lecture, consider an economy where inflation is 8 percent and the government wants it to be 5% instead. This economy must sacrifice _____ percent of one year’s GDP to do so.

(Carefully follow all numeric directions. Enter your answer "as a percent, but without the percentage sign." In other words, if the economy must sacrifice 99 percent of one year's GDP, enter only 99 in the blank.)

2. Use the information from the last question. Let’s say residents of the economy can endure only a loss of 3% real GDP per year. How many years must this sacrifice happen?

3. Use the information from the above one last time – the above yearly sacrifice in GDP means an increase in unemployment of _______ percent each year.

1. All of the economic thinkers that we have covered so far, including the mercantilists, the physiocrats, Adam Smith, Malthus, and Ricardo, have dealt with the topic of international trade as well as international trade policy. With the exception of Malthus, discuss the evolution of their ideas regarding those topics. You should mention their ideological leanings as well as the substance of their views. Do not forget to mention their policy recommendations.

What are the five major categories of pricing strategies? Give two examples of each category. Note: my subject is INTRODUCTION TO BUSINESS.  

Explain the Fisher Quantity Theory of Money

What benefits do undocumented workers bring to the state economy? What costs do they bring? Do you believe they are a net economic gain or drain for the state?

Why in many countries an increase in economic growth has not translated into an overall improvement in economic/social welfare?

Explain why monopoly sellers usually offer discount prices to buyers who are willing to mail in a rebate coupon or endure some other type of inconvenience.

Why do economists generally prefer “market-based” policies to “command-and-control” (regulatory) policies to deal with “market failures”?

Q1: Demand in a market is represented by Q = 500 – 50P where P is measured in dollars per unit and Q is measured in units per week. Note: Demand in this question is identical to that in Q1 of Assignment #10.

a) Complete the following table. Find elasticity between $10 and $8, between $8 and $6, between $6 and $4, between $4 and $2, and between $2 and $0. Show elasticity to two decimal places. Do not round your answers too early or your final result will be less accurate.

b) Graph the relationship between the quantity demanded and total revenue using the grid on the next page.

c) Is total revenue positively related, negatively related or unrelated to the price of the product when demand is elastic?

d) Is demand perfectly elastic, elastic, unit elastic, inelastic or perfectly inelastic when total revenue is at its maximum?

Q2: The demand for a product is represented by Q = 210 – 3P. At what price is demand unit elastic? Show clearly how you arrived at your answer.

1. (5%) For each of the following data series, state what type of data you are dealing with and which type of graph (from the list below) would be best (the most effective way) to describe the data.

1. Column (bar) chart
2. Line chart
3. Pie chart
4. Box-plot
5. Histogram

Data series:

Need to answer what type of data and use which type of graph

1. The number of years since a person immigrated to Canada. These are individual level data collected as part of the 2006 census and are given for 11,000 people (i.e. there are 11,000 observations).

2. CPI in Canada, 1980 to 2015

3. Employment by major industry sectors across Canada in 2010.

• What is the future of the Third Sector?
• Is there a way to change society so it is no longer needed?
• How has your opinion of the Third Sector changed?