Part -1:
Suppose the graph below represents the market for flu shots. Use this to answer the following questions.
1. a) What is the market equilibrium price and quantity? What is the efficient price and quantity?
b) What is the total social value per unit at market equilibrium? What is the value per unit of external benefit created by this product at market equilibrium?
c) At market equilibrium, is this market over or under-producing? By how many units?
Part -2:
1. The table shows the TR and TC schedules for a competitive firm. Using your knowledge of cost and profit structures, fill in all the missing blanks.
Table: Cost and Profit
|
Q
|
TR ($)
|
TC ($)
|
Profit
|
MR
|
MC
|
|
0
|
0
|
50
|
|
|
|
|
|
|
|
I
|
50
|
|
|
|
10
|
|
2
|
90
|
75
|
|
|
|
|
3
|
120
|
|
23
|
|
|
|
4
|
140
|
122
|
|
|
|
|
If)
|
|
|
|
10
|
30
|
Part -3:
1. This figure shows the production costs of two firms that produce steel beams. If these two firms represent total production in the industry, how should they allocate the production of 300 beams to minimize costs?
2. If 300 beams are produced, and these two firms represent total industry production, what will be the price of a single beam?