buyer and seller are haggling over what price will be paid. If the seller is the better negotiator, what happens to the total surplus (consumer + producer surplus)? it increases
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- Considermarketforagoodcharacterizedbythefollowinginverse demand and supply functions: PX = 10 − 2QX and PX = 2 + 2QX.a. Compute the surplus received by consumers and producers.b. Now suppose all manufacturers of this good are to pay a lump tax of $0.10that will be used by the government regulators to defray some of the environmental cost imposed by this good’s production. What will be the new surplus received by consumers and producers?c. Based on your results in part ‘b’ above, how will you evaluate the impact of this tax policy on the society? Explain2. Hulk has a kebab demand function with D(p)= 500-p, where p is the price of the kebab. The cost of a kebab is $50, so: a. If the price of a kebab is $50, then how many kebabs will there be consumed by Hulk? b. What is the maximum consumption of the Hulk? c. What's the max price Hulk can pay? d. How much Gross consumer surplus can Hulk achieve? e. How much Net Consumer surplus can Hulk achieve?Suppose there are three identical blenders available to be purchased. Buyer 1 is willing to pay $30 for one, buyer 2 is willing to pay $25 for one, and buyer 3 is willing to pay $20 for one. If the price is $25, how many blenders will be sold and what is the value of consumer surplus in this market? * a. One blender will be sold and consumer surplus is $30. b. One blender will be sold and consumer surplus is $5. c. One blender will be sold and producer surplus is $5. d. Three blenders will be sold and consumer surplus is $0. e. None of these.
- 1. The demand function for a certain brand of DVD is given byp = −0.01x^2− 0.2x + 8where p is the unit price in dollars and x is the quantity demanded each week,measured in units of a thousand. Determine the consumers’ surplus if the market price is set at $5 per disc. PART 2 of number 1: The supplier of the DVD in problem #1 will make x hundred units availablein the market when the unit price in dollars isp =√36 + 1.8xDetermine the producers’ surplus if the market price is set at $9 per unit. 2.The demand function for a certain kind of mattress is given byp = 600e^−0.04xwhere p is the unit price in dollars and x (in units of a hundred) is the quantity demanded each month.(a) Find the number of mattresses demanded per month if the unit price isset at $250 per mattress.(b) Use the results of part (a) to find the consumers’ surplus if the sellingprice is set at $250 per mattress. PART 2 of number 2: The manufacturer of the brand of mattress of problem #2 will make x hundred units…The following Table refers to four buyers’ willingness to pay for papadums. Each buyeris willing to buy at most one papadum and no more. buyer Willingness to pay ($) for onepapadum Lincoln 17.00 Jefferson 15.00 Franklin 9.00 Washington 3.00 (a) Let the competitive market price be $4.00: calculate the total consumer surplusin the market at this price.(b) Assume now that there is only a single seller of papadums, and she knows eachbuyer’s willingness to pay. Assume that this seller incurs a cost of $4.00 perunit of papadum produced (i.e., the marginal cost is constant). If she intends tomaximise profits, how many papadums would this seller supply to the market,and what price would she charge? Remember, the price has to be the same foreach unit sold. Hint: start at a price of $17 and calculate what profit would be.Then lower the price just enough to attract an additional buyer and calculatewhat the new profit would be. Repeat this until all four buyers are purchasingthe…Explain the social efficiency by taking into account consumer surplus and producer surplus.
- (2) (Assume that s = 0 (there is no subsidy.)(a) Write down firm A’s profit function. (No work required.)(b) Find each firm’s best response function. (You may do this directly or by setting s to zero inyour expressions from (1b).(c) Solve for equilibrium outputs (q*A, q*B). You may either use the symmetry in this problem toassume a symmetric solution, or solve for firm B’s best response and solve the two best responsessimultaneously. (d) Solve for the equilibrium price.(e) Solve for the equilibrium profits.The equations below represent the demand and supply curves for annual gym memberships in a certain city. qD= 500 − 2p, qs= 0.5p − 50 Assume that the city government offers a per-unit subsidy of $25 to those who sign up for an annual gym membership. a. Find the equilibrium pre and post subsidy. What share of the subsidy benefit accrues to the buyers? b. Do a welfare analysis comparing consumer surplus, producer surplus, and total surplus pre and post subsidy. Is there a deadweight loss associated with the implementation of this subsidy? Graph ypur answerA5 Alpha and Beta are Bertrand duopoists facing demand Q(P)=25-P/2 and MC=$10. Assume prices must be in whole dollars, but quantity need not be an integer. If Beta knows Alpha will choose the price maximizing total producer surplus, what is Beta's producer surplus if it chooses its best response?
- A computer store sells WP and SS. Given below are themaximum amounts two consumers will pay for these goods and for a bundle that contains bothgoods. WP SS Bundle carolina $100 $90 $190 shawn $90 $40 $130 (a) What is the firm’s revenue if it sells the WP at a price of $90 and the SSat a price of $90? The goods are only available individually and not as a bundle. Please showyour calculations.(b) Will the firm charge $130 or $190 for the bundle if it wants to earn maximum revenue?Assume that the goods are only sold as a bundle and not available separately. Please explain.(c) Will selling individually or selling a bundle result in higher revenues?Write down a model of positive production externality with two firms, in which theproduction activities of one firm directly affects the production/cost of the other firm.State and explain the key assumptions of the model. Using the model, answer thefollowing questions:(a) Explain why the presence of a positive production externality could prevent therealisation of an efficient outcome.(b) Name a possible cure for the positive production externality and explain how itcould solve the inefficiency problem.Suppose there are three identical flatsavailable to be purchased. Buyer 1 is willing to pay €30,000for one, buyer 2 is willing to pay €25,000for one, and buyer 3 is willing to pay €20,000for one. If the price is €25,000, how many flatswill be sold and what is the value of consumer surplus in this market?
