Microeconomics Assignment

# Microeconomics Assignment - Al Ain University of Science...

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Al Ain University of Science and Technology College of Business Administration Al-Ain Campus Paper Submitted by: 1. Khulood Khalil Madi ID # 201410637 2. Alaa Shehada ID # 201310128 To the council of the College of Business Administration, AAU, in partial fulfillment of requirements of the course of Principles of Microeconomics (0509210) through second semester, Academic year of 2014 / 2015. Supervised by: Dr. Salem Al Jundi The assignment scores 10% of your total course marks: /10 April 2015

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Part3 .. problems solving ….. Demand, Supply, and Market Equilibrium … assignment …. 1- (P.109)Suppose the demand and supply curves for eggs in the United States are given by the following equations: Q d = 100 – 20P Q s = 10 + 40P Where Q d = millions of dozens of eggs Americans would like to buy each year; Q s = millions of dozens of eggs U.S. farms would like to sell each year; and P = price per dozen of eggs. a. Fill in the following table: PRICE (PER DOZEN) QUANTITY DEMAND (Q d ) QUANTITY SUPPLIED (Q s ) \$ 0.50 \$ 1.00 \$ 1.50 \$ 2.00 \$ 2.50 The answer: PRICE (PER DOZEN) QUANTITY DEMAND (Q d ) QUANTITY SUPPLIED (Q s ) \$ 0.50 90 m 30 m \$ 1.00 80 m 50 m \$ 1.50 70 m 70 m \$ 2.00 60 m 90 m \$ 2.50 50 m 110 m b. Use the information in the table to find the equilibrium price and quantity. The equilibrium price is \$ 1.50 and the the equilibrium quantity is 70 millions of dozens. c. Graph the demand and supply curves and identify the equilibrium price and quantity.
2-“No firm is completely sheltered from rivals; all firms compete for the consumer dollars. If that Is so, then pure monopoly does not exist.” Do you agree? Explain. How might you use Chapter? 18’s concept of cross elasticity of demand to judge whether monopoly exists? Though it is true that “all firms compete for the dollars of consumers,” it is playing on words to Hold that pure monopoly does not exist. If you wish to send a first-class letter, it is the postal Service or nothing. Of course, if the postal service raises its rate to \$10 to get a letter across town In two days, you will use a courier, or the phone, or you will fax it. But within sensible limits, Say a doubling of the postal rate, there is no alternative to the postal service at anything like it at a comparable price. The same case can be made concerning the pure monopoly enjoyed by the local electricity company in any town. If you wish electric lights, you have to deal with the single company. It is a pure monopoly in that regard, even though you can switch to oil or natural gas for heating. Of course, you can use oil, natural gas, or kerosene for lighting too—but these are hardly convenient options. The concept of cross elasticity of demand can be used to measure the presence of close substitutes for the product of a monopoly firm. If the cross elasticity of demand is greater than one, then the demand that the monopoly faces is elastic with respect to substitute products, and the firm has less control over its product price than if the cross elasticity of demand were inelastic. In other words, the monopoly faces competition from producers of substitute products.

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Extra : 3- (P.109)Suppose the market demand for pizza is given by Q d
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