EBK INTERMEDIATE MICROECONOMICS AND ITS
12th Edition
ISBN: 9781305176386
Author: Snyder
Publisher: YUZU
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Question
Chapter 8.5, Problem 2MQ
To determine
To discuss: the impact of $10,000 fine on firm’s shut down decision in short-run. Also, analyze the impact if $1,000/day fine is imposed.
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“New England power producers are preparing for potential strain on the grid this winter [Winter 2022-23: December 2022 through February 2023] as a surge in natural-gas demand abroad threatens to reduce supplies they need to generate electricity.”
For Question 1, consider the New England market for electricity prior to Winter 2022-23 by considering this setting roughly one year ago, in December 2021.
Assume that in December of 2021, the market for electricity was in a short-run equilibrium.
Draw a graph that shows supply and demand for electricity market in its December 2021 equilibrium. This graph will serve as a starting point for your analysis in Questions 2 through 5.
When drawing this graph, please assume that the demand curve is downward sloping and supply curve is upward sloping.
Clearly show the market equilibrium in December 2021, labeling the equilibrium price and quantity.
Please remember to clearly label your axes, with P on the vertical axis and Q on the horizontal axis.…
The following equations describe the long-run situation for prices and costs, where the numbers indicate the amounts of labor and capital needed to produce a unit of wheat and cloth. W is the wage rate/hour and R is the rental rate/hour.
Price of wheat = 1 W + 2 R
Price of cloth = 2 W + 1 R
In autarky, the price of wheat is 5 and the price of cloth is 4. As trade opens up, wheat price rises from 5 to 6. Cloth price remains at 4.
Consider Hypothetical Case 1 above. After trade opens up, how many units of wheat can a worker buy with one hour of labor?
A. 5/6
B. 2/15
C. 1/5
D. 1/9
E. None
The following equations describe the long-run situation for prices and costs, where the numbers indicate the amounts of labor and capital needed to produce a unit of wheat and cloth. W is the wage rate/hour and R is the rental rate/hour.
Price of wheat = 1 W + 2 R
Price of cloth = 2 W + 1 R
In autarky, the price of wheat is 5 and the price of cloth is 4. As trade opens up, wheat price rises from 5 to 6. Cloth price remains at 4.
Consider Hypothetical Case 1 above. In autarky, how many units of wheat can a worker buy with one hour of labor?
A. 5/4
B. 1/4
C. 1/5
D. 2/5
E. None of the above.
Chapter 8 Solutions
EBK INTERMEDIATE MICROECONOMICS AND ITS
Ch. 8.3 - Prob. 1MQCh. 8.3 - Prob. 2MQCh. 8.3 - Prob. 1.1MQCh. 8.3 - Prob. 2.1MQCh. 8.4 - Prob. 1TTACh. 8.4 - Prob. 2TTACh. 8.4 - Prob. 1MQCh. 8.4 - Prob. 2MQCh. 8.5 - Prob. 1TTACh. 8.5 - Prob. 2TTA
Ch. 8.5 - Prob. 1.1TTACh. 8.5 - Prob. 2.1TTACh. 8.5 - Prob. 1MQCh. 8.5 - Prob. 2MQCh. 8 - Prob. 1RQCh. 8 - Prob. 2RQCh. 8 - Prob. 3RQCh. 8 - Prob. 4RQCh. 8 - Prob. 5RQCh. 8 - Prob. 6RQCh. 8 - Prob. 7RQCh. 8 - Prob. 8RQCh. 8 - Prob. 9RQCh. 8 - Prob. 10RQCh. 8 - Prob. 8.1PCh. 8 - Prob. 8.2PCh. 8 - Prob. 8.3PCh. 8 - Prob. 8.4PCh. 8 - Prob. 8.5PCh. 8 - Prob. 8.6PCh. 8 - Prob. 8.7PCh. 8 - Prob. 8.8PCh. 8 - Prob. 8.9PCh. 8 - Prob. 8.10P
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