hw8 - Economics 108 Landsburg Homework#8 week of...

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Economics 108 Landsburg Homework #8 week of 11/6/06 RECOMMENDED READING: Chapter 15. 1. Waldo’s Lunch Counter is the only restaurant in Whoville. Which of the following circum- stances might affect the price of a hamburger at Waldo’s? a) The price of meat goes up. b) A new restaurant tax of 50 cents per hamburger is imposed. c) Waldo is discovered to be in violation of a safety code, and the violation would be prohibitively expensive to correct. As a result, Waldo is certain to incur a fine of $500 every year from now on. d) Word gets around that a lot of Waldo’s customers have been having stomach problems lately. 2. A monopoly firm faces the following demand curve: Price Quantity $100 0 90 1 80 2 70 3 60 4 50 5 40 6 30 7 20 8 10 9 Suppose the firm’s marginal cost curve is flat at $10 per item. a) What price does the firm charge and what quantity does it sell? b) What would be the price and quantity if this product were supplied competitively?
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This note was uploaded on 06/09/2008 for the course ECO 108 taught by Professor Landburg during the Fall '06 term at Rochester.

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