ECON 201 Study Guide - Final Guide: Deadweight Loss, Root Mean Square, Economic Surplus
24 Oct 2018
School
Department
Course
Professor
Document Summary
Please solve all of the problems below: short problems - explain! No credit will be given without a justi(cid:12)cation of your answer. (8 pts each: a rm is described by a cost function for which marginal costs are (everywhere) increasing in output y. For some output price p, graph the rm"s producer surplus in two di erent ways (and in two di erent diagrams). Explain in words why both methods work: amanda consumes blue (good 1) and red (good 2) pencils. Initially, each of these goods costs 1 dollar but for some unknown reason, the price of blue pencils doubles to 2 dollars. Explain carefully: mike tries to impress his new girlfriend kathryn: "in a market with perfect com- petition, rms are unable to make any pro ts". Explain carefully whether or not (or under which circumstances) mike"s belief is correct/incorrect: an industry consists of n = 10 rms, each with a cost function c(y) = 20y + y2.
