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Steve's utility function is $U=B C,$ where $B=$ veggie burgers per week and $C=$ packs of cigarettes per week. Here, $M U_{B}=C$ and $M U_{C}=B$ What is his marginal rate of substitution if veggie burgers are on the vertical axis and cigarettes are on the horizontal axis? Steve's income is $\$ 480,$ the price of a veggie burger is $\$ 8,$ and that of a pack of cigarettes is $\$ 4 .$ How many burgers and how many packs of cigarettes does Steve consume to maximize his utility? When a new tax raises the price of a burger to $\$ 12,$ what is his new optimal bundle? Illustrate your answers in a graph. In a related graph, show his demand curve for burgers with after-tax price on the vertical axis and show the points on the demand curve corresponding to the before- and after-tax equilibria. (Hint: See Appendix $4 \mathrm{B}$.) $\mathrm{C}$

Steve's utility function is $U=B C,$ where $B=$ veggie burgers per week and $C=$ packs of cigarettes per week. Here, $M U_{B}=C$ and $M U_{C}=B$ What is his marginal rate of substitution if veggie burgers are on the vertical axis and cigarettes are on the horizontal axis? Steve's income is $\$ 480,$ the price of a veggie burger is $\$ 8,$ and that of a pack of cigarettes is $\$ 4 .$ How many burgers and how many packs of cigarettes does Steve consume to maximize his utility? When a new tax raises the price of a burger to $\$ 12,$ what is his new optimal bundle? Illustrate your answers in a graph. In a related graph, show his demand curve for burgers with after-tax price on the vertical axis and show the points on the demand curve corresponding to the before- and after-tax equilibria. (Hint: See Appendix $4 \mathrm{B}$.) $\mathrm{C}$

Microeconomics

Applying Consumer Theory

Effects of a Price Change
In Figure $5.1,$ how does Mimi's utility at $E_{1}$ on $D^{1}$ compare to that at $E_{2}$ ? As we move down from the highest point on an individual's downward-sloping demand curve, must the individual's utility rise?

In Figure $5.1,$ how does Mimi's utility at $E_{1}$ on $D^{1}$ compare to that at $E_{2}$ ? As we move down from the highest point on an individual's downward-sloping demand curve, must the individual's utility rise?

Microeconomics

Applying Consumer Theory

Deriving Demand Curves
Linda loves buying shoes and going out to dance. Her utility function for pairs of shoes, $S$, and the number of times she goes dancing per month, $T$, is $U(S, T)=2 S T,$ so $M U_{S}=2 T$ and $M U_{T}=2 S .$ It costs Linda $\$ 80$ to buy a new pair of shoes or to spend an evening out dancing. Assume that she has $\$ 1,280$ to spend on clothing and dancing. a. What is the equation for her budget line? Draw it (with $T$ on the vertical axis), and label the slope and intercepts. b. What is Linda's marginal rate of substitution? Explain. c. Solve mathematically for her optimal bundle. Show how to determine this bundle in a diagram using indifference curves and a budget line. A

Linda loves buying shoes and going out to dance. Her utility function for pairs of shoes, $S$, and the number of times she goes dancing per month, $T$, is $U(S, T)=2 S T,$ so $M U_{S}=2 T$ and $M U_{T}=2 S .$ It costs Linda $\$ 80$ to buy a new pair of shoes or to spend an evening out dancing. Assume that she has $\$ 1,280$ to spend on clothing and dancing. a. What is the equation for her budget line? Draw it (with $T$ on the vertical axis), and label the slope and intercepts. b. What is Linda's marginal rate of substitution? Explain. c. Solve mathematically for her optimal bundle. Show how to determine this bundle in a diagram using indifference curves and a budget line. A

Microeconomics

Consumer Choice

Constrained Consumer Choice

Suppose Gregg consumes chocolate candy bars and oranges. He is given four chocolate bars and three oranges. He can buy or sell a candy bar for $\$ 2$ each. Similarly, he can buy or sell an orange for S1. If he has no other source of income, draw his budget constraint and write the equation. What is the most he can spend, $Y$, on these goods?

Microeconomics

Consumer Choice

Budget Constraint

Questions asked

INSTANT ANSWER

Consider a Perfectly Competitive Industry where each firm is identical and the total cost function for each firm in both the short-run and the long-run is given by: 𝑇𝑇𝑇𝑇 = 𝑞𝑞3 − 16𝑞𝑞2 + 114𝑞𝑞 Given that the Market Demand Curve is: 𝑄𝑄 = 3260 − 10𝑝𝑝, - What is the equilibrium quantity in the Market? - How many firms are in the industry in the long-run equilibrium

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A monopoly firm faces two markets where the inverse demand curves are Market​ A: Upper P Subscript Upper A Baseline equals 140 minus 2.75 Upper Q Subscript Upper A​, Market​ B: Upper P Subscript Upper B Baseline equals 120 minus Upper Q Subscript Upper B. The firm operates a single plant where total cost is C​ = 20Qplus0.25Q Superscript 2​, and marginal cost is m​ = 20​ + 0.5Q. Part 2 Suppose the firm sets a single price for both markets. Using the information​ above, the profit maximizing price is​ $86.18 and the profit maximizing quantity is 53.37 units. Given this​ information, you determine that the firm will earn a profit of ​$    enter your response here. ​(Round your response to two decimal​ places.) Part 3 Now suppose the firm is able to engage in group price discrimination. To maximize​ profits, the firm will produce    enter your response here units for market A and charge customers in market A a price of ​$    enter your response here per unit. And it will produce    enter your response here units for market B and charge customers in market B a price of ​$    enter your response here per unit. ​(Round your responses to two decimal​ places.) Part 4 If the firm engages in group price discrimination it will earn a profit of ​$    enter your response here. ​(Round your responses to two decimal​ places.) Part 5 If a firm is able to set different prices in different​ markets, the profit will be ▼

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INSTANT ANSWER

If a monopoly faces an inverse demand curve of pequals270minus​Q, has a constant marginal and average cost of ​$30​, and can perfectly price​ discriminate, what is its​ profit? What are the consumer​ surplus, welfare, and deadweight​ loss? How would these results change if the firm were a​ single-price monopoly? Part 2 Profit from perfect price discrimination ​(pi​) is ​$    enter your response here. ​(Enter your response as a whole​ number.) Part 3 Corresponding consumer surplus is ​(enter your response as whole ​numbers)​: CSequals​$    enter your response here​, welfare is Wequals​$    enter your response here​, and deadweight loss is DWLequals​$    enter your response here. Part 4 Profit from​ single-price profit-maximization is piequals​$    enter your response here. ​(Enter your response as a whole​ number.) Part 5 Corresponding consumer surplus is ​(enter your response as whole ​numbers)​: CSequals​$    enter your response here​, welfare is Wequals​$    enter your response here​, and deadweight loss is DWLequals​$    enter your response here. Profit from perfect price discrimination () is $. (Enter your response as a whole number.CS$,welfare isW$W$,and deadweight loss isDWL$DWL$.Profit from single-price profit-maximization is $. (Enter your response as a whole number.CS$,welfare isW$W$,and deadweight loss isDWL$DWL$.

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INSTANT ANSWER

The 2002 production run of​ 25,000 new Thunderbirds included only​ 2,000 cars for Canada. Yet potential buyers besieged Ford dealers there. Many buyers hoped to make a quick profit by reselling the cars in the United States. Reselling was relatively​ easy, and shipping costs were comparatively low. When the Thunderbird with the optional hardtop first became available at the end of​ 2001, Canadians paid​ C$56,550 for the​ vehicle, while U.S. customers spent up to​ C$73,000 in the United States. ​ Why?   Part 2 Ford provided Canadian markets only​ 2,000 Thunderbirds in order to practice Part 3 A. ​two-part pricing. B. second minus degree price discrimination. C. group price discrimination. D. ​tie-in sales. E. first minus degree price discrimination. Part 4 Why would a Canadian want to ship a​ T-Bird south?   Part 5 Absent transaction and transportation​ costs, a Canadian would buy a​ T-Bird in Canada and then sell it in the U.S. to Part 6 A. prevent resale. B. develop market power. C. avoid taxes. D. price discriminate. E. earn profit. Part 7 Why did Ford require that Canadian dealers sign an agreement with Ford that prohibited moving vehicles to the United​ States? Part 8 Ford required Canadian dealers to sign an agreement prohibiting moving vehicles south to the United States Part 9 A. to limit market power in Canada. B. to identify demand in Canada. C. to eliminate price discrimination in Canada. D. to prevent resale between Canada and the U.S. E. to differentiate demand in the U.S. and Canada. Ford provided Canadian markets only 2,000 Thunderbirds in order to practicetoFord required Canadian dealers to sign an agreement prohibiting moving vehicles south to the United States

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INSTANT ANSWER

Suppose a firm has a cost curve equal to Cost equals 800 plus 15 q. Part 2 Marginal Cost equals 15​, and the Average Cost equals StartFraction 800 Over q EndFraction plus 15 . Part 3 The inverse demand curve is p equals 400 minus 4 q. Part 4 So Marginal Revenue equals 400 minus 8 q. Part 5 What would be the unregulated​ firm's profit-maximizing​ output?    enter your response here ​ (round your answer to three decimal​ places) Part 6 What would be the unregulated​ firm's profit-maximizing​ price? ​$    enter your response here ​ (round your answer to the nearest​ penny) Part 7 What would be the​ firm's total​ profit? ​$    enter your response here ​(round your answer to the nearest​ penny) Part 8 What would be the deadweight​ loss? ​$    enter your response here ​(round your answer to the nearest​ penny)

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INSTANT ANSWER

Suppose a​ monopoly's price elasticity of demand equals minus5 and the marginal cost of production equals ​$500.00. Part 2 The profit-maximizingLOADING... price is ​$    enter your response here. ​ (Enter a numeric response using a real number rounded to two decimal​ places.) Part 3 What will be the​ firm's markupLOADING...​? Part 4 When maximizing​ profit, the​ monopoly's markup is    enter your response here percent. ​(Round your response to the nearest​ percent.)

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INSTANT ANSWER

Given the cost​ function: Cost equals 0.2 q cubed minus 6 q squared plus 80 q plus Upper F​, and marginal​ cost: 0.6q2 minus 12q​ + 80 where q​ = output, and F​ = fixed costs​ = ​$50. The demand equation​ is: p​ = 100 minus 2q. Determine the​ profit-maximizing price and output for a monopolist. Part 2 The​ profit-maximizing output level occurs at    enter your response here units of output ​(round your answer to the nearest tenth​). Part 3 The​ profit-maximizing price occurs at ​$    enter your response here ​

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INSTANT ANSWER

uppose that the demand curve for wheat is Upper Q Superscript Upper Dequals200minus40p and the supply curve is Upper Q Superscript Upper Sequals40p. The government provides producers with a specific subsidy of sequals​$2 per unit. Part 2 How do the equilibriumLOADING... price and quantity​ change? Part 3 The equilibrium price ▼ increases decreases by ​$    enter your response here and the equilibrium quantity ▼ increases decreases by ​$    enter your response here units.  ​(Enter numeric responses using real numbers rounded to two decimal​ places.) Part 4 What effect does this tax​ (subsidy) have on consumer​ surplus, producer​ surplus, government​ revenue, welfare, and deadweight​ loss? Part 5 Consumer surplusLOADING... ▼ increases decreases by ​$    enter your response here. Part 6 Producer surplusLOADING... ▼ decreases increases by ​$    enter your response here. Part 7 Government revenue ▼ increases decreases by ​$    enter your response here. Part 8 ​Therefore, deadweight lossLOADING... from the subsidy is ​$

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INSTANT ANSWER

Assume a competitive firm faces a market price of ​$55​, a cost curve​ of: C​ = 0.002q cubed ​+ 30q ​+ 750​, and marginal cost curve​ of: MC​ = 0.006q Superscript 2​ + 30. Part 2 The​ firm's profit maximizing output level ​(to the nearest tenth​) is    enter your response here ​units, and the profit ​(to the nearest penny​) at this output level is ​$    enter your response here. Part 3 In this​ case, firms will ▼ enter exit . This will cause the market supply to ▼ shift right shift left . This will continue until the price is equal to the minimum average cost of ​$    enter your response here ​(round your answer to the nearest penny​). At this price level the profit will be ▼ the level of variable cost cannot be determined zero the level of fixed cost .

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Should a firm shut down if its revenue is Requals​$800 per​ week, its variable cost is VCequals​$700, and its sunk fixed cost is Fequals​$2,400? Part 2 This firm should Part 3 A. not shut down because total cost is greater than variable cost. B. shut down because total cost is greater than revenue. C. not shut down because revenue is positive. D. shut down because fixed cost is greater than revenue. E. not shut down because variable cost is less than revenue. Part 4 Should a firm shut down if its revenue is Requals​$800 per​ week, its variable cost is VCequals​$1,200, and its sunk fixed cost is Fequals​$2,400? Part 5 This firm should Part 6 A. shut down because total cost is greater than revenue. B. not shut down because revenue is positive. C. not shut down because total cost is greater than variable cost. D. shut down because fixed cost is greater than revenue. E. shut down because varible cost is greater than revenue. Part 7 Over the long​ run, should a firm shut down if its revenue is Requals​$100,000, and its variable cost is VCequals​$200,000? Part 8 This firm should Part 9 A. not shut down because revenue is positive. B. shut down because revenue is declining. C. not shut down because variable cost is not relevent. D. shut down because variable cost is less than revenue. E. shut down because variable cost is greater than revenue. This firm shouldThis firm shouldThis firm should

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