Entries by Frank Main

Consider a market for energy drinks consisting of only one firm. The firm has a linear cost function: C(q)=4q, where q represents quantity produced by the firm. The market inverse demand function is given byr P(Q)=24-2Q, where Q represents total industry output. Based on the given information answer the following. 1. What price will the firm charge? What quantity of energy drinks will the firm sell? 2. Now suppose a second firm enters the market. The second firm has an identical cost function. What will be the Cournot equilibrium output for each firm? 3. Whay is the Stackelberg equilibrium output for each firm of firm 2 enters second? 4. How much profit will each firm make in yhe Cournot game? How much in Stackelberg? 5. Which type of market do consumers prefer: monopoly, Cournot duopoly or Stackelberg duopoly?

August 31, 2021 in /by

Consider a market for energy drinks consisting of only one firm. The firm has a linear cost function: C(q)=4q, where q represents quantity produced by the firm. The market inverse demand function is given byr P(Q)=24-2Q, where Q represents total industry output. Based on the given information answer the following. 1. What price will the […]

Suppose that the quantity of corn supplied depends on the price of corn (_P_) and the amount of rainfall (_R_). The demand for corn depends on the price of corn and the level of disposable income (_I_). The equations describing the supply and demand relationships are _Q__s__ _= 20_R _+ 100_P _and _Q__d__ _= 4000 − 100_P _+ 10_I_. a) Sketch a graph of demand and supply curves. b) Sketch a graph that shows the effect of an _increase _in rainfall on the equilibrium price and quantity of corn. c) Sketch a graph of demand and supply curves that shows the effect of a _decrease _in disposable income on the equilibrium price and quantity of corn.

August 31, 2021 in /by

Suppose that the quantity of corn supplied depends on the price of corn (_P_) and the amount of rainfall (_R_). The demand for corn depends on the price of corn and the level of disposable income (_I_). The equations describing the supply and demand relationships are _Q__s__ _= 20_R _+ 100_P _and _Q__d__ _= 4000 […]

Justin has the utility function _U _= _xy_, with the marginal utilities _MUx _= _y _and _MUy _= _x_. The price of _x _is $2, the price of _y _is _p__y_, and his income is 40. When he maximizes utility subject to his budget constraint, he purchases 5 units of _y_. (a) What must be the price of _y _and the amount of _x _consumed? (b) Prove that this allocation follows the equi-marginal principle. (c) What would be the new bundles of x, y if Px was $3

August 31, 2021 in /by

Justin has the utility function _U _= _xy_, with the marginal utilities _MUx _= _y _and _MUy _= _x_. The price of _x _is $2, the price of _y _is _p__y_, and his income is 40. When he maximizes utility subject to his budget constraint, he purchases 5 units of _y_. (a) What must be […]

Terry’s utility function over leisure (_L_) and other goods (_Y)_ is _U_ (_L_, _Y)_ = _Y _+ _LY_. The associated marginal utilities are _MU__Y__ _= 1 + _L _and _MU__L__ _= _Y_. He purchases other goods at a price of $1, out of the income he earns from working. Show that, no matter what Terry’s wage rate, the optimal number of hours of leisure that he consumes is always the same. (a) What is the number of hours he would like to have for leisure? (b) Determine the MRS of leisure for labour (c) Draw a leisure-influenced labor curve

August 31, 2021 in /by

Terry’s utility function over leisure (_L_) and other goods (_Y)_ is _U_ (_L_, _Y)_ = _Y _+ _LY_. The associated marginal utilities are _MU__Y__ _= 1 + _L _and _MU__L__ _= _Y_. He purchases other goods at a price of $1, out of the income he earns from working. Show that, no matter what Terry’s […]