Introductory Microeconomics ECON 1110 Homework Assignment #6 The homework assignment is due at the start of class on Thursday, Dec 4. You are permitted to work in small groups, but you must submit your individual answers. Please be neat, or else you may not receive full credit. On any graphs you must correctly label all axes with the appropriate units of measure. Note that unless information is presented to the contrary, you can assume that the demand curve is downward sloping and the supply curve is upward sloping. 1. You must indicate whether the following statement is True, False, or Uncertain, and explain your reasoning. Points will be awarded solely on the basis of your explanation. One economically defensible argument in favor of government provided health car is that there is an element of public goods to providing services to those who can t afford to pay for them 2. The <a href="/keyword/following-table-lists/" >following table lists</a> the Unit, marginal value (MV), and marginal cost (MC). Unit 1 2 3 4 5 6 7 8 9 10 11 12 13 14 MV 80 75 70 65 60 55 50 45 40 35 30 25 20 15 MC 30 30 30 30 30 30 30 30 30 30 30 30 30 30 a. If the firm is a price-taker, what are the equilibrium price, quantity, consumer surplus, producer surplus, and gains from trade? b. If the firm is a price-searcher, what are the equilibrium price, quantity, consumer surplus, producer surplus, and gains from trade? 3. Assume that everything is the same as in question 2, except that in addition to the marginal costs the price-searcher had to pay a fixed cost of $100. a. If the firm is a price-searcher, what are the equilibrium price, quantity, consumer surplus, producer surplus, and gains from trade? b. If the government set a price-maximum at the efficient price of $30, how much would the government have to subsidize the firm so that it didn t go out of business? 4. Assume that everything is the same as in question 2, except that there are two firms in the industry, and each firm has a constant marginal cost of $30 per unit each produced (there are no fixed costs). a. What is the equilibrium output in the industry? Please explain. b. If the two firms form a cartel, what is the equilibrium output? c. If the two firms form a cartel, how large is the incentive for each firm to cheat?