P2 is the new market clearing price Surplus & Shortage ● results in a new market clearing price and quantity ● consumers bid up prices that are too low to clear the market ● suppliers put products “on sale” when prices are too high to clear the market Surplus Qs>Qd Shortage Qd>Qs ● when P=P1 the Demand is to purchase Q1 ● but the suppliers are channeling a lot of their goods ● usually pressure by suppliers ○ ↓ pressure on price ● when price too low ● low price firms should be really using resources on something else
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price charged by Title King is $ 20‚000. Ajax has the following short-run cost curve: TC = 800‚000 - 5‚000Q + 100Q^2 a) Compute the marginal cost curve for Ajax answer: Marginal Cost (MC) = dTC/dQ Since the derivative of a constant = 0‚ MC = -5‚000 + 200Q b) Given Ajax pricing strategy‚ what is the marginal revenue function for Ajax? Since Ajax is pricing as if it were a perfectly competitive firm‚ then‚ it’s price would equal its marginal revenue‚ thus: P = MR = $20‚000
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decided to remodel the mansion and use it as recuperative quarters for patients willing to pay a premium for luxurious accommodations. The cost to the hospital of using the mansion includes Selected Answer: d. both b and c Question 2 0 out of 0.5 points Which of the following statements is false? Selected Answer: c. d If economic profit is positive‚ accounting profit must also be positive. Question 3 0.5 out of 0.5 points Economic profit is the best measure
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the market clearing level is the quantity supplied equal to quantity demanded. Formulas Qs = 12000 + 50P Qd = 52000 - 30P Qd = Qs-----------------(1) Putting values in the above equation we get‚ 52000 - 30p = 12000 + 50p 52000 - 12000 = 30p + 50p 40000 = 80p P = 500 Clearing level of price (P) = 500 Clearing level of quantity (Q) = 52000 - 30P = 52000 - 30(500) Clearing level of quantity (Q) = 52000 - 15000 = 37000 / 1000 = 37 M/ton 2. Answer to part
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ECON 600 Lecture 3: Profit Maximization I. The Concept of Profit Maximization Profit is defined as total revenue minus total cost. Π = TR – TC (We use Π to stand for profit because we use P for something else: price.) Total revenue simply means the total amount of money that the firm receives from sales of its product or other sources. Total cost means the cost of all factors of production. But – and this is crucial – we have to think in terms of opportunity cost‚ not just explicit
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or 40+4Q=100-2Q since Qs=Qd also 6Q=60 Q*=60/6=10 Equilibrium quantity Now to find the price Ps*=40+ 4(10) = 80 or Pd*=100-2(10) = 80 So to graph we say how much is the price when the quantity demanded (or supplied) is zero in both equations Ps = 40 + 4(0)= 40 Pd = 100 – 2(0) = 100. These are the intercepts at the Y axis. To calculate the intercept at the X axis we say how much is the quantity demanded when the price is zero‚ so 0 = 100 -2Qd 2Qd=100 Qd=100/2=50 there is no need
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too late‚ you will have to take a taxi to the restaurant‚ which is right next to the concert hall‚ and then back home after the concert. The two taxi rides will cost you a total of $60. If you go to the tuition lesson as usual‚ you will spend only $30 on your dinner and you can walk to your student’s home. Assuming you are rational and there is no other cost you need to consider‚ what would have to be the minimum benefit you can get from the dinner and the concert to make you willing to go out with
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for a product sold by an oligopolist is given below: QD = 370 – P The firm’s marginal cost function is given below: MC = 10 + 4Q Calculate the equilibrium price and quantity. Solution: P = 370 – Q so TR = 370Q – Q2 and MR = 370 – 2Q MR = 370 – 2Q = 10 + 4Q = MC so Q = 60 and P = 310 2. The demand function for a product sold by an oligopolist is given below: QD = 135 – 0.5P The firm’s marginal cost function is given below: MC = 30 + 4Q Calculate the equilibrium price and quantity.
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cleaner. Using the 26 observations report we calculated pricing and cash flows. The General Demand equation used is QD = a + bP + cMavg + dPh Where a is the dependent variable‚ bP is the price of the PoolVac good‚ cMavg is the average household income‚ and the dPh is the price of the related good (Howard Industries). . An estimated demand equation for PoolVac is: Qd = 2729 – 10.8P + 0.0214Mavg + 3.17Ph Where‚ bP is the price of the PoolVac good‚ cMavg is the average household income‚ and
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Book: Principles of Economics (N. Gregory Mankiw) http://admin.wadsworth.com/resource_uploads/static_resources/0324168624/8413/Mankiw_TenPrinciple_Videos.html Introduction economy: Greek: the one who manages the household scarcity: the limited nature of society`s resources economics: the study of how society manages it´s scarce resources economy: a group of people interacting with one another as they go about their lives important: management of society´s resources; resources are scare
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