In the market in which you just participated, a seller only incurred a cost if she actually sold an orange. Assume instead:

• Each seller brings oranges to market

• Each has already paid for the oranges she brings

• She can always bring unsold oranges to tomorrow’s market, where demand is expected to be stronger.

1. If you are a seller, how does this change affect your behaviour?

2. In a market described by these new assumptions, what do you predict will happen to the price?

What is the estimated total cost of the crisis in each of these three countries?USA, UK, and Germany State clearly the source of the estimates. What factors explain most of the total cost of the crisis in each of the countries??

Your company just purchased a piece of equipment. The maintenance cost of the equipment is estimated at $1,200 for the first year and it is to rise by $200 each year. How much should be set aside now to have enough to cover for the maintenance cost for the next 7 years? Assume payments are made at the end of each year and an interest rate of 4%.

1. Suppose that there is “dominant” firm with total cost function of c(q) = 100 + 10q + 0.25q². It faces a market demand function (inverse) of p = 100 − 0.5Q, where Q indicates total market supply. This dominant firm has to deal with 10 fringe firms, each of whom behaves perfectly competitively. Each fringe firm has a marginal cost function dc(q)/dq = 20q + 25

   a) Calculate the supply function of the fringe firms
   b) Using this, calculate the residual demand function of the dominant firm.
   c) Derive the marginal revenue function of the dominant firm.
   d) Find the profit-maximizing price of the dominant firm.
   e) How much does the competitive fringe supply to the market?

With the help of graph explain the Ricardian theory of trade under increasing cost of production (bow shaped ppf).

Suppose the firm is producing a quantity on the downward sloping portion of its average cost curve. What does this imply about its production function at that quantity?