Each of n farmers can costlessly produce any quantity of wheat desired. Suppose that he k – th farmer produces Wk, so that the total amount of what produced is W = W1 + W2 + ... + Wn. The price P at which wheat sells is then determined by the demand equation P = e¬W.
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Check that the use of the equilibrium strategy yields a profit π equal to e-n for each farmer.
Profits are the excess of revenue receipts over the costs incurred by the firm. In order to maximize their profits, firms must equalize their marginal cost with their marginal revenue. In terms of total revenue and total costs, profits are mximized when the diffference between the total revenue and the total cost is the maximum.
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- For a subsistence agricultural household, which of the following happen when the price of the staple they are producing increases? [SelectMultiple] Group of answer choices Due to profit effect, their utility as producers increases. The impact on overall welfare of the household is ambiguous since it depends on the relative forces of profit effect and price effect. Their is no effect since subsistence households never sell or buy their staple production. Due to price effect, their utility as consumers decreases.(a) If lemons cost $1 per pound, the wage rate is $1 per hour, and theprice of lemonade is p, what is his marginal cost function? (b) What is his supply function? (c) If lemons cost $4 per pound, the wage rate is $9 per hour, and theprice of lemonade is p, explain in detail how these changes would affect theoriginal supply function in part (b)? ONLY ANSWER PART B AND C.Suppose the supply of apple pickers in Southwest Michigan can be expressed by the equation Qs=2/15(W-10) . An apple farmer advertises a wage of $100 per day to pick apples; however, when the day of the harvest arrives the farmer tells those assembled at the orchard that only 10 pickers are needed, and, as more than 10 pickers showed up looking for work, the wage will fall to the equilibrium. How many pickers showed up to work the apple harvest? What is the equilibrium wage offered by the farmer? Graph the supply of and demand for labor at the orchard, indicating the equilibrium price. Calculate the pickers’ total producer surplus, including the surplus lost by the pickers who were available to work but were not hired.
- At the market price in part a, the net gain to consumers when 10,000 units are purch ased is $__________. d) At the market price in part a, the net gain to producers when they supply 10,000 units is $__________.For each stock in the stock market, the number of shares sold daily equals the number of shares purchased. That is, the quantity of each firm’s shares demanded equals the quantity of its shares supplied. So, if this equality always occurs, why do the prices of stock shares ever change?Consider the labor market, i.e. the market for hours of work. When analyzing labor markets, price is just the hourly wage (e.g. 10 dollars an hour), and quantity is the number of hours demanded (by firms) or supplied (by workers). Suppose the government imposes a minimum wage of $15 per hour. True or false? (i) If the inverse demand function is P = 100 -15Q + 0.5Q2, Q<=10, and the supply function is Q = P2/18, where Q is in million hours and P is in dollars per hour, the imposition of the minimum wage will cause the market quantity of work hours to increase. (ii) If the demand and supply functions are given by Q = 10 - P and Q = P, where Q is in million hours and P is in dollars per hour, there will be an excess demand for labor.
- The marginal cost of producing one more unit at a given quantity can be inferred by- A: is given by the market price no matter the particular quantity being considered. B: Looking at where the supply curve and demand curve intersect. C: Finding the price associated with that quantity on the demand curve. D: Finding the price associated with that quantity on the supply curve.A company called Tramlaw has become the only employer in the local market for retail labor. The marginal value (extra profit before wages) of hiring an additional worker-hour is ?? = 60 − ?, where ?? is marginal value and ? is the hours of labor worked. The supply of workers is given as ? = ? 2 , where ? is the wage (the price of labor). Assume Tramlaw pays all retail workers in this market the same wage. For parts (a) and (b), ignore the numbers and equations (though you could use the equations as hints). a. Explain in words why Tramlaw’s marginal cost of hiring an additional worker-hour is higher than supply, which represents the marginal cost to the worker of providing an additional hour of labor. b. Draw a market diagram of Tramlaw’s local labor monopsony, including marginal value (MV), supply (S), and marginal cost (MC). Graphically indicate the monopsonist’s profit-maximizing quantity of labor ??, wage ??, the efficient quantity of labor ? ∗ , and any deadweight loss (DWL)…Consider an INCREASE in the wage (as demanded by the labor groups) to a higher level than the equilibrium price for labor. SHOW geometrically what will happen in the labor market. What problem(s) is/are likely to arise in the labor market?
- The marginal and average total cost curves for barbers in an area are cosntant at $12.00/haircut. The daily demand curve for haircuts in the area is given by: P = 22 - 0.001Qd where P is the price in dollars per haircut and Qd is the daily quantity demanded in number of haircuts. Haircuts are provided in a perfectly competitive market and each barber can provide exactly 25 haircuts daily. Suppose that the government decides to limit the number of barbers to 320. Each year, barbers must obtain a government-issued license to cut hair. Based upon the previous information: a. What will be the long-run equilibrium price for a haircut given there are only 320 licensed barbers?b. How much economic profit will each licensed barber earn daily?Consider the perfectly competitive market for gasoline. The aggregate demand forgasoline is D (p) = 100 - p. What is the choke price or the or the highest price possible in the given demand function?Consider the labor market in an imaginary coastal town called Nutsland. There is only one buyer in that market, namely Nutsland Farm that operates with a production function of Q= The supply of labor is given as L=w-2, where w is the wage. On the output side, Olive Farm takes the price P =20 TL/kg for its olive oil as given due to intense competition in that market. Find Olive Farm's profit-maximizing labor demand. What wage does it have to pay? What would be the wage in Nutsland if the market were competitive? Compare the welfare implications of a) versus b). Calculate the deadweight loss and show it on a graph.