MBA 6008
Chapter Problems 2
Chapter 4: Problem 6, Advanced
Analysis, on page 91. (Using midpointView complete question »
Chapter Problems 2
Chapter 4: Problem 6, Advanced Analysis, on page 91. (Using midpoint
formula).
Ed = change in quantity / change in price
Sum of quantities/2 sum of prices/2
Currently, at a price of $1 each, 100 popsicles are sold per day in the
perpetually hot town of Rostin. Consider the elasticity of
supply. In the short run, a price increase from $1 to $2 is unit-elastic (Es =
1.0). So how many popsicles will be sold each day if the short run if the price
rises to $2 each? In the long run, a price increase from $1 to $2 has an
elasticity of supply of 1.50. So how many popsicles will be sold per day in the
long run if the price rises to $2 each? (Hint: Apply the midpoints approach to
the elasticity of supply).
Chapter 5: Problem 4, Advanced Analysis, a through c, on page
113.
Assume the following values for Figures 5.4a and 5.4b. Q1 = 20 bags. Q2 = 15
bags. Q3 = 27 bags. The market equilibrium price is $45 per bag. The price at a
is $85 per bag. The price at c is $5 per bag. The price at f is $59 per bag, The
price at g is $31 per bag. Apply the formula for the area of a triangle (Area =
½ X Base X Height) to answer the following questions.
a. What is the dollar value of the total surplus (producer surplus plus
consumer surplus) when the allocatively efficient output level is being
produced? How large is the dollar value of the consumer surplus at that output
level?
b. What is the dollar value of the deadweight loss when output level Q2 is
being produced? What is the total surplus when output level Q2 is being
produced?
c. What is the dollar value of the deadweight loss when output level Q3 is
produced? What is the dollar value of total surplus when level Q3 is produced?
Chapter 6: Problem 6, Advanced Analysis, on page 132.
Let MU A = z = 10 - x and MU B = z = 21 - 2y, where z is
marginal utility per dollar measured in utils, x is the amount spent on product
A, and y is the amount spent on product B. Assume that the consumer has $10 to
spend on product A and B – That is, x + y = 10. How is the $10 best allocated
between A and B? How much utility will the marginal dollar yield?
View less »
ask a similar
question»