A two-good economy is in a competitive equilibrium. The price of a piece of candy is $2 and the price of a desk is $12. The marginal cost of candy is given by MCc = 2Qc and the marginal cost of a desk is MCd = 4 + 4Qd. The current production level of candy is one piece. What is the output of desks? A) Qd = 1 B) Qd = 2 C) Qd = 4 D) Qd = 5
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- Why is a production possibilities frontier typically drawn as a curve, rather than a straight line?Time remaining:00 :09 :39EconomicsUse the following to answer questions (29) - (31):In the town of “One Horse” there is one movie theater. Two groups of consumers, adults (A) andchildren (C), attend this theater. Suppose the demand for movies by adults is given by:QA = 50 - 0.50PA, where PAis price ofan adultmovie ticket(in cents)and QAis the numberofmovie tickets sold to adults atthe theater. Suppose the demand for movies by children is given by:QC = 20 - 0.50PC,where PCispriceofa children’s movie ticket(in cents)and QCis the numberofmovie tickets sold tochildren atthe theater. Also, imagine totalcostis fixed at$450, thus makingmarginalcostofprovidingonemore movie ticket to either an adult or a child constant at zero.[29]Ifthe movie theateris able to price discriminate amongits two groups ofconsumers, then itshouldcharge a higher price to group A.A.TrueB.False[30]Ifthemovie theateris able to price discriminate amongits two groups ofconsumers, then itsmaximum profit is closest in value…Supposeg1increases, but stillc1+b1+g1<1. Using a graph of the goods market, show how we would represent an increase in the value ofg1on equilibrium output y. Be sure to label all axes, curves, and equilibrium points. Suppose instead,c1+b1+g1= 0. Is the equilibrium in the goods market still possible? If so, what is the equilibrium output? You must explain your answer to receive full credit.
- Consider the production problem discussed in class in which 24 labor hours and 4 machinehours are to be allocated between food (x) production and wine (y) production. Suppose theproduction functions for x and y are as follows:Also, suppose the preferences of the agents are given by:Finally, suppose the MRT is given bywhere x and y denote, respectively, the aggregate quantities of food and wine produced.For each of the following allocations, determine whether they are (i) feasible and (ii) Paretoefficient. If they are inefficient, explain intuitively how it is possible to make someone betteroff without making the other person worse-off.a. ((14,2),(10,2),(5,10),(23,18))b. ((8,2),(16,2),(5,14),(11,18))c. ((14,2),(10,2),(14,21),(14,7))The many identical residents of Whoville lovedrinking Zlurp. Each resident has the followingwillingness to pay for the tasty refreshment:First bottle $5Second bottle 4Third bottle 3Fourth bottle 2Fifth bottle 1Further bottles 0a. The cost of producing Zlurp is $1.50, and thecompetitive suppliers sell it at this price. (Thesupply curve is horizontal.) How many bottleswill each Whovillian consume? What is eachperson’s consumer surplus?b. Producing Zlurp creates pollution. Each bottle hasan external cost of $1. Taking this additional costinto account, what is total surplus per person inthe allocation you described in part (a)?c. Cindy Lou Who, one of the residents of Whoville,decides on her own to reduce her consumptionof Zlurp by one bottle. What happens to Cindy’swelfare (her consumer surplus minus the cost ofpollution she experiences)? How does Cindy’sdecision affect total surplus in Whoville?d. Mayor Grinch imposes a $1 tax on Zlurp. Whatis consumption per person now?…Suppose that every consumer is on his/her budget constraint where MRS = 0.1, the price of good X is $2, the price of good Y is $1 and firms are operating on the PPF where MRT = 4. Assume the PPF is concave. To increase efficiency, consumers should consume [more, less , the same amount] of good X; [ore, less, the same amount] of good Y. To increase efficiency, firms should produce ["", "", ""] of good X; ["", "", ""] of good Y.
- Consider a Sraffa system that describes production with a surplus. Assume that the whole of thewage is variable. The number of commodities in the system is n. Some are non-basiccommodities.a. Write the price equations in matrix notation. (Make sure to mention the dimensions of thevectors and matrix in your equation). b. Explain the economic meaning of the A matrix and l vector. c. Identify the unknown and known variables of your system. d. How can you make the system determinate, i.e., make the number of equations equal tothe number of unknowns? e. State the economic meaning of the viability condition and express it mathematically. f. Assume that the viability condition is satisfied and the rate of profit is given exogenouslyat a level that is lower than the maximum rate of profit. Explain, with the help of therelevant theorem, why the solution for prices must be nonnegative. NOTE: You need to use only three equations, one for specifying the numeraire, thesecond for expressing the…Question 25 Economists say that a market where goods are not consumed by those valuing the goods most highly is O laissez-faire.. unequal. O inefficient. O rational. Note:- Please avoid using ChatGPT and refrain from providing handwritten solutions; otherwise, I will definitely give a downvote. Also, be mindful of plagiarism.Answer completely and accurate answer.Rest assured, you will receive an upvote if the answer is accuraOn a microeconomic demand curve, a decrease in price causes an increase in quantity demanded because the product in question is now relatively less expensive thansubstituteproducts.Explainwhyaggregatedemand does not increase for the same reason in response to a decrease in the aggregate price level. In other words, whatcausestotalspendingtoincreaseifitisnotbecause goods are now cheaper?
- I would like to know just part d,e, and f. Thank you Suppose that the supply of tomato soup in a city is represented byQS = 100P – 10PT − 50where P is the price of tomato soup and PT is price of tomato needed to produce tomato soup. All prices are indollars and quantity is in liters.Assume that the current tomato price is $15.Suppose that the demand for the tomato soup is QD = 1000−60P + 0.3Iwhere P is the price of the tomato soup and I is a representative household’s income.Assume that at the equilibrium, income is $12000.a) What are the current equilibrium price and quantity of the tomato soup? Show the equilibrium on a detailedgraph.b) Suppose that income decreases to $10400. What is the new equation for the demand for tomato soup? Doesthis correspond to an increase or decrease in the demand for tomato soup? Show the effect of this event onthe equilibrium and the diagram you used in part (a)c) Start from the equilibrium in part a) and now suppose that the price of the tomato…Suppose that you have information indicating that the price of steel (an important input ofproduction in the auto industry) has doubled during the past few months. Show howthis economicshock will influence the market for American made cars and give your predictions for equilibriumprice and sales change.person 1 can allocate her 8 hour day between the production of two goods: A and B. Each hour devoted to good B yeilds 2units . whereas each hour devoted to good A produces 4 units. state whether 9 units of good B and 12 units of good A are unattainable, efficient, or inefficient.(state all that applies) select one or more attainable inefficient efficient unattainable