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What type of externality (positive or negative) is present in each of the following examples? Is the marginal social benefit of the activity greater than or equal to the marginal benefit to the indivi
Draw the demand and supply curves. What is unusual about this supply curve? Why might this be true? What are the equilibrium price and quantity of tickets?
A monopolist knows that in order to expand the quantity of output it produces from 8 to 9 units that it must lower the price of its output from $2 to $1. Calculate the quantity effect and the price ef
Suppose the movie theater cannot price-discriminate and needs to charge both students and professors the same price per ticket. If the movie theater charges $5, who will buy tickets and what will the
How large is each individual consumer surplus? How large is total consumer surplus? Calculate producer surplus by summing the producer surplus generated by each sale.
If De Beers charges the monopoly price, how large is the individual consumer surplus that each buyer experiences? Calculate total consumer surplus by summing the individual consumer surpluses. How lar
The mayor’s economic adviser reminds her that she is focusing only on the price effect and ignoring the quantity effect. Explain why the mayor’s estimate of a one-third loss of revenue is
Each of the following firms possesses market power. Explain its source. Merck, the producer of the patented cholesterol-lowering drug Zetia
A profit-maximizing firm in a perfectly competitive industry should select the output level at which the difference between the market price and marginal cost is greatest.
Local steakhouses suffer from the popularity of sushi and start incurring losses. What will happen to the number of steakhouses in town in the long run? Explain your answer.
A profit-maximizing business incurs an economic loss of $10,000 per year. Its fixed cost is $15,000 per year. Should it produce or shut down in the short run? Should it stay in the industry or exit in
Suppose instead that the price of DVDs is $20. Now what is the profit-maximizing quantity of DVDs that Bob should produce? What will his total profit be now? Will he produce or shut down in the short
For each of the following, is the industry perfectly competitive? Referring to market share, standardization of the product, and/or free entry and exit, explain your answers.
For each of the following, is the business a price-taking producer? Explain your answers. A cappuccino café in a university town where there are dozens of very similar cappuccino cafés
ABC uses job-order costing. It applies overhead cost to jobs on the basis of direct labor-hours. For the current year the company estimates that it will work 20,000 direct labor-hours and will incur $
ABC Company uses job-order costing. It incurred the following costs for job M301: 20 pounds of raw materials (all direct) were issued to be used for job M301 at a cost of $7 per pound
where f is the dimensionless function (which must have dimensionless arguments in order to be dimensionally consistent! - for any smooth function this can be proved via a Taylor series expansion)
A vertical, frictionless piston-cylinder device contains a gas that is in equilibrium with the weight of the piston balanced by the internal pressure for the gas.
A solar-water heating system uses solar panels on the roof of a large build, 40.0 m above the storage tank. The pressure at the panels is 1 atmosphere. What is the absolute pressure at the top of the
A town in the middle-of-nowhere is built up around a large 100 meter hill. Since the hill is in the center of a town, it is proposed at a town-hall meeting that a water tower be placed at the top of t
Express PV, where P is pressure and V is volume, in terms of the base SI units: the kilogram, meter, and second. Express your answer in terms of the abbreviations (kg, m, s). Compare this answer to th
Express kinetic energy in terms of the base SI units: the kilogram, meter, and second. Write your answer in terms of the abbreviations ({kg, m, s}), and then identify the resulting derived unit.
Two metal blocks, one at 50o, and the other at 0o are set next to each other in a perfectly insulted box at time t = 0. At this instant are the blocks in thermal equilibrium? Now suppose you wait a lo
A coin is biased so that a bead is three times as likely to occur as a tail. Find the expected number of tails when this coin is tossed twice.
A private pilot wishes to insure his airplane for $200,000. The insurance company estimates that a total loss may occur with probability 0.002, a 50% loss with probability 0.01, and a 25% loss with pr