Project #27250 - Economics

please look at attachment

Ques. 1

 

  • Answer each of the following questions on supply and producer surplus.What is producer surplus, and how is it measured?What is the relationship between the cost to sellers and the supply curve? Other things equal, what happens to producer surplus when the price of a good rises?

 

  • Explain Arthur Laffer’s theory of tax rates relative to tax revenue. What is the effect of a tax on the deadweight loss? Why is it sometimes difficult to predict what will happen when a tax rate is decreased or increased?

 

  • Describe both quotas and tariffs. How do they impact domestic prices and deadweight loss? How does an import quota differ from an equivalent tariff? What is best for a nation as a whole: a tariff, a quota, or free trade? Explain your answer.

 

  • Although most economists agree that free trade is beneficial for a country, there are numerous arguments against free trade. Describe five of the arguments against free trade.

 

  • Describe the Coase theorem, which suggests that efficient solutions to externalities can be arrived at through bargaining. Explain how this happens. Under what circumstances does bargaining fail to produce a solution?

 

  • Why do wild salmon populations face the threat of extinction while pet goldfish populations are in no such danger?

 

  • Define and explain the terms income tax and consumption tax. What would be the benefits of taxing consumption and not income?

 

  • List the federal government's three most important sources of tax revenue. How do these differ from your state government's three most important sources of tax revenue and those of local government? Why do you think that these different government entities use different tax bases?

 

  • Examine the table at the following link, which shows what four consumers willing to pay for a haircut:

 

 

 

 

 

 

 

see attach ment 

 

 

 

 

 

 

 

 

 

 

 

The next link includes a table that shows what four businesses charge for haircut:

 

 

 

 

 

see attachment 

 

 


Each business can produce no more than one haircut.

 

  • In the most efficient world, which companies should cut hair and which customers should get a haircut? (Note: It might be less than 4.)

 

  • How large is the maximum possible total surplus and what is the least possible surplus?

 

 

 

Ques 2

 

 

  • At its current level of production, a profit-maximizing firm in a competitive market receives $12.50 for each unit it produces and faces an average total cost of $10. At the market price of $12.50 per unit, the firm's marginal cost curve crosses the marginal revenue curve at an output level of 1000 units. What is the firm's current profit? What is likely to occur in this market, and why?

 

  • Under what conditions should a firm shut down production in the short run? Under what conditions should a firm shut down in the long run? Explain the difference between the short and long run conditions.

 

  • Define and explain the relationship between total revenue, average revenue, and marginal revenue for a monopolist. What is monopoly profit? Should a monopolist produce quantities of product greater than that which would maximize profits?

 

  • In what ways can a government create a monopoly? Why might a government do this?

 

  • Explain the output effect and the price effect for an oligopoly. How does each influence the oligopolist's production decision?

 

  • What is a natural monopoly? How does a natural monopoly lead to lower costs than would exist if there were more than one firm in an industry that is a natural monopoly?

 

  • Entry of firms in a monopolistically competitive industry is characterized by two "external" effects. What are these effects and how do they affect a monopolistically competitive firm. How are consumers and incumbent firms influenced by these externalities?

 

  • Does a monopolistic competitor produce more or less output as compared to an efficient level of production? Explain. What are the benefits and drawbacks of this? Should the government intervene to alter this?

 

  • In order to determine whether his time is being spent optimally, over the past year a commercial fisherman has recorded the information shown in table at the following link; he has recorded the hours he has spent per day fishing and the quantity of fish caught. What is the marginal product of fish per hour spent?

 

 

Fisherman's Table

 

The fisherman has a fixed cost of $200 per day and variable costs of $150 per hour (wages and fuel). Fill in the information missing in the following table.

Fill in Table

 

 

 

The fish sell for for $100 a ton. How many hours fishing per day he work in order to earn a maximum profit on his day's activity? And how much is that profit? Please show all your calculations.

 

 

Ques 3

 

 

    1. Labor is the only input used by a perfectly competitive firm. It hires workers for $50 a day. The firm's production function is as shown in the following Table. (The table will open in a new window.) Each unit of output sells for $10.

 

 

 

  • Complete the table to show the marginal product of labor and the value of the marginal product of labor.

 

  • How many days of labor should the firm hire? Explain.

 

 

  • Describe the factors of production. What are the returns to these factors (their price)? Describe the marginal products of each factor and how the value of the marginal product of each factor is determined.

 

  • Describe the process by which the market for capital and the market for labor reach equilibrium. What happens to each if demand for the final product were to increase? Why?

 

  • Do consumers play a role in perpetuating discrimination in labor markets? If so, how? If not, explain the reasoning for your answer.

 

  • Explain the concept of diminishing marginal utility. Since all goods are scarce, does diminishing marginal utility contradict the statement that individuals always want more of all goods?

 

  • Describe each of the four properties of indifference curves.

 

  • Describe and explain the budget constraint. How does a consumer maximize utility under a given budget constraint? How do consumers know if they are not maximizing utility?

 

  • Explain what is meant by "asymmetric information." Identify and explain the two basic types of problems that arise when there is asymmetric information.

 

  • Explain the Condorcet Paradox, the failure of majority rule to produce transitive preferences for society. Explain Arrow’s impossibility theorem. What does this say about society's choices?

 

  • When prices change, the income effect and substitution effect both contribute to the impact on quantities consumed. Explain how both affect a consumer's utility maximization.

 

 

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Due By (Pacific Time) 04/20/2014 04:00 pm
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