Homework 4 Answer Key

# Homework 4 Answer Key - ECON 1014-01 HOMEWORK#4 DR...

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ECON 1014-01 HOMEWORK #4 DR. PODGURSKY Due: 11/13/2014. Homework can be turned in after class or by 4:00 p.m. at the Econ Help Desk in 1A West in the Professional Building. No assignments will be accepted after 4:00 p.m. on 11/13/2014. Please print this assignment from Blackboard and staple!!! (Show your work if specified) Name: _________Answer Key___________ Pawprint ID: ______30 points + 4 Bonus___ Chapter 13 Use the following to answer questions 1-3. Figure: Monopoly Revenue 1. What is the maximum price per unit that the consumer is willing to pay at Q = 117? (1 pt) \$28 per unit 2. What is the profit-maximizing quantity and price? (1 pt) Q = 117; P = \$28 per unit 3. What is the monopolist’s total revenue, assuming it is a profit-maximizer? (1 pt) TR = P x Q = \$28 x 117 = \$3,276

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Score ______ / 30 + 4 Chapter 14 Use the following to answer questions 4-6. Figure: Monopolist 4. Based on the demand curves for a monopolist's product in two different markets—Market A and Market B—what price should the monopolist charge in Market A? What is the quantity sold in this market? What about price and quantity in Market B? (2 pts) Market A: P = \$10; Q = 90 (1 pt.) Market B: P = \$9; Q = 130 (1 pt.) 5. How much profit is the monopolist making in Market A, Market B, and in total? (3 pts) Market A: (10 x 90) - (5 x 90) = 900 - 450 = \$450 (1 pt.) Market B: (9 x 130) - (5 x 130) = 1170 - 650 = \$520 (1 pt) Total: Market A Profit + Market B Profit = 450 + 520 = \$970 (1 pt) 6. If the monopolist were to charge a uniform price of \$10 in both markets, what would be the monopolist’s total profit? Show your work. [Hint: the quantity demanded in Market B is 97.5 when the price is \$10] (2 pts) Total Profit = Profit A + Profit B Profit = [(10 x 90)-(5 x 90)]+[(10 x 97.5)-(5 x 97.5)] = 450 + 487.5 = \$937.50 (2 pts, - 1 if one mistake, - 1/2 no work)
Chapter 15 Use the following to answer questions 7-9. Table: Market Demand for Oil Suppose that oil is produced by 10 countries, each of which produces 10 million barrels of oil a day (MBD) for a total 100 MBD. The world price of oil at this quantity is \$36 per barrel so each country earns \$360 million a day.

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