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Solution to homework 3

# Solution to homework 3 - Econ 200 Autumn 2007 Ohio State...

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Econ 200 Autumn 2007 Ohio State University Homework Three Suggested Solution Chapter 5 (3+2+5) 2. a. The minimum supply-price equals the lowest price at which a producer is willing to produce the given quantity. Ann’s minimum supply-price for 10 rides is \$15.00; Arthur’s minimum supply-price is \$17.50; and, Abby’s minimum supply-price is \$20.00. b. Ann has the largest producer surplus. When the price is \$17.50, Ann produces the largest quantity. And, at any quantity for which Ann produces rides, her supply schedule shows that her minimum supply- price (which is equal to her marginal cost) is lower than Arthur’s and Abby’s minimum supply-price. d. The market supply schedule equals the sum of the quantity supplied by Ann, Arthur, and Abby at each price. So, when the price is \$10.00 per ride, the market quantity supplied is 0 rides; when the price is \$12.50 per ride, the market quantity supplied is 5 rides; when the price is \$15.00 per ride, the marker quantity supplied is 15 rides; when the price is \$17.50 per ride, the market quantity supplied is 30 rides; and when the price is \$20.00 per ride, the market quantity supplied is 45 rides.

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