# Project #46706 - MicroEconomic 203 Home Work

WeekÂ 3Â Homework

Â Â

1a) When is a market equilibrium considered to be â€œefficientâ€? Explain.Â

Â

1b) Define consumer surplus and producerÂ surplus.Â

Â

1c) Using end-of chapter question 2.8 (page 459), identify the areas on the figure that represent:Â

Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â

*Consumer surplus in the market equilibriumÂ Â

*Producer surplus in the market equilibriumÂ Â

*TotalÂ surplus in the market equilibriumÂ Â

Â Â

*Consumer surplus under a maximum price of \$10Â

*Producer surplus under a maximum price of \$10Â

*TotalÂ surplus under a maximum price of \$10Â

Â Â

*Consumer surplus under a maximum quantity of 70Â

*Producer surplus under a maximum quantity of 70Â

*TotalÂ surplus under a maximum quantity of 70.Â

Â Â

Â

Â

2a) Consider a market where aÂ maximumÂ price (or price ceiling which is below the equilibrium price) hasÂ been mandated. Â Â Â

Â Â Â Â Â  As the price elasticity of supply increases, is the resulting deadweight loss larger orÂ smaller? Explain.Â

Â

Â

2b) Based on the data in question 1.9 (page 459), find the willingness to pay and the consumer surplus for the average

Â Â Â Â Â  consumer.Â

Â

Â

2c) Use the scenario in end-of-chapter Question 5.8 (page 462) to answer this question.Â

Â

*The initial equilibrium price and quantity in the market for cleaning services are \$10 and 1,000 hours, Â Â Â Â respectively. Â Assume the city imposes a tax of \$3 per hour on cleaning services, one-third of theÂ Â

tax is shifted forward to consumer, and the price elasticity of demand is - 0.833. Â Find the newÂ Â

equilibrium price and quantity in the market for cleaning services.Â Â

Â

Â

Â

3a) Assume that a consumer with a fixed income must select the combination of widgets (W) and movies (M)Â that makes

Â Â Â Â Â  her happy. Â Briefly discuss the process this consumer uses to make this decision.Â

Â

Â

Â

Â

3b) UsingÂ the scenario fromÂ end-of-chapter question 1.13 (page 489), you are a consumer consultant who has been hired

Â Â Â Â Â  to determine whether aÂ consumer is maximizing his utility.Â Â

Â

Â

Â

Â *If your clientâ€™s answers indicate that he is indeedÂ maximizingÂ utility, what are his answers? Explain.Â

Â

Â

Â

Â

3c)Â Using the scenario from end-of-chapter question 1.12 (from Chapter 22, page 489):Â

Â

*complete the table below, and use it to identify theÂ utility-maximizing combinationÂ of rides andÂ Â  Â Â Â Â Â Â Â

Â  games.Â Â  (Provide a rationale for the combination you choose.)Â

Â

Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â  QuantityÂ Â Â Â Â Â Â Â Â Â  Marginal Utility Â Â Â Â Â Â Â Â Marginal Utility per Dollar (MU/P)Â

 Â  Â  RidesÂ Â  Â  GamesÂ Â  Â  RidesÂ Â  Â  GamesÂ Â Â Â  Rides (P = \$2)Â Games (P = \$1)Â 1 Â Â Â  Â Â Â  28Â 50 10 Â  Â Â  Â 2 26 42 14 Â  Â Â  Â 3 Â  24 36 18 Â  Â Â  Â 4 22 26 26 Â  Â Â  Â

Â

Â
3d)Â Briefly describe theÂ substitutionÂ andÂ incomeÂ effects.Â  How do these combined effects help determine theÂ Â

Â Â Â Â Â  negative slope of a demand curve? Elucidate.Â

Â Â

Â

4a)Â Briefly discuss an indifference curve. What is the relevance of theÂ marginal rate of substitutionÂ (orÂ MRS)?Â Â

Â Â Â Â Â  Explain.Â Â

Â

4b) How is the indifference curve useful in helping us find the utility-maximizing combination of products?Â Â

Â Â Â Â Â  Elucidate.

Â

Â

5a)Â How doesÂ accountingÂ profit differ fromÂ economicÂ profit?Â  Assuming implicit costs are not zero, when economic profit

Â Â Â Â Â  is zero, is accounting profit positive? Â Explain.Â

Â

5b) How does the shape of the average cost curve change in the long run?Â  Elucidate.Â

Â

Â

 Subject Business Due By (Pacific Time) 11/08/2014 06:00 pm
TutorRating
pallavi

Chat Now!

out of 1971 reviews
amosmm

Chat Now!

out of 766 reviews
PhyzKyd

Chat Now!

out of 1164 reviews
rajdeep77

Chat Now!

out of 721 reviews
sctys

Chat Now!

out of 1600 reviews

Chat Now!

out of 770 reviews
topnotcher

Chat Now!

out of 766 reviews
XXXIAO

Chat Now!

out of 680 reviews