Econ Ch8

Chapter 8 1.Question #1, page 189 in text By allowing scholar to fleece and choose between charges, they bequeath pick price willing below their reservation price and university cannot get to their supererogatory. For example, sleepers will fork out a pine awayr surplus of $2,500 when they get the dorm room room by $3,000. The eaters will have consumer surplus of $ 3,500 when they buy the meal propose by $2,500. The best price to consume the maximum consumer surplus and get the highest revenue is to charge a total of $8,000 for a both dorm room and meal plan. Chapter 9 2. task #5, p. 221 in text. Total cost = cc + 50 q Market direct: P = 290 (1/3) Q Number of steadfastlys in securities industry: n=14 The take level that maximizes lucre: q = (a c) / [(n+1)*b] q = (290 50) / [ (14+1)*(1/3)] = 48 building block 48 units is the quantity level were the firm can maximize their profit. At this level of achievement the trade reach it is Nash Equilib rium , hence there is no motivator for firm to increase their production or price. 3. Problem #6, p. 221 in text. (You do not need to derive the Cournot equilibrium. skilful cypher for the values using the appropriate formulas.) Market implore: P = 400 2Q Unit cost production = 40 a.

loadeds quantity in equilibrium is : q1 = (a-c)/3b = (400-40)/(3*2)= 60 unit = q2 truehearteds revenue: P= 400 2 * (2*60) = $160 Firms profit = (60*160) (60*40) = $7200 ? b.Monopoly output: MR=400-4q MC=40 MR=MC 400 4q = 40 then q=90 unit The reason that producing on half the monopoly output (90*1.5 = 135) a Nash eq uilibrium outcome is that it will exceed the! market demand of Nash equilibrium ($160). 4. Problem #8, p. 221-222 in text. (HINT: First wait the lolly of a market with ii firms, and then dwell this surgical process for 3, 4, and 5 firms.) a.To obtain the long run equilibrium, offspring of firms in the industry should be infinity, and it is calculated by: qi= (a-c) / [(n+1)*b] b.For two firms: Quantity: q1=q2= (a-c)/[(n+1)*b]=...If you want to get a abundant essay, night club it on our website: BestEssayCheap.com

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