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hw3 - Homework#3 due September 3 in class Econ 11 Summer...

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Homework #3 due September 3 in class Econ 11 °Summer Session C 2008 University of California, Los Angeles Each question is worth 5 points, for a total of 25 points. 1. Suppose there is a market made up of two types of individuals with the following demand curves. x 1 ( P ) = 13 ° 2 P x 2 ( P ) = 5 ° P where P is the market price of good x and x i for i = 1 ; 2 is the quantity demanded of each type at every price. (a) If there is only one consumer of each type, ±nd the market demand. (b) Suppose there is a single, pro±t-maximizing producer (with no in²u- ence over the price) with a cost function C ( x ) = 1 6 x 2 + 25 where x is the quantity supplied. Find the ±rm³s supply function. (c) Given the supply function from part b , what is the market price P for good x and how much is sold? (d) At that price, what is the producer surplus? What is the consumer surplus enjoyed by each type of consumer? (e) Suppose there are two consumers of type 1 and eight of type 2. Find the market demand, the market price if there is only one producer, and the quantity sold.
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