PS1-fall-2019-ELI-Updated.docx - Economics 103 Professor...

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Economics 103Your Name(s): Eli Goldstein and Anna SteadmanProfessor FriedmanYour TA: Jorge Quesada VelazcoFall 2019Your Section Time and Day: Friday at 10:10 amProblem Set 1Due Date: October 21 by 4PMHand in hard copy to your TA’s mailbox, 1stfloor of Gordon Hall1.(3 points) Made the right way steamed mussels is delicious. Your friend Rihanna has abandoned her music career to open a bistro, which specializes in French cuisine and, includingmussels. She has done some market research and finds that your neighbors valuemusselsaccording to the following schedule: servingMU mussels1$32.00 2$29.76 3$27.68 4$25.54 5$23.75 6$22.09 7$20.54 8$19.11 9$17.77 10$16.52 a.(1 points) Graph the demand curve for mussels. Does the demand curve have a positive or negative slope? Why?
b.(1 point) How many servings will Rihanna sell at $32? How many at $25.54? $17.77?At112345678910- 5.00 10.00 15.00 20.00 25.00 30.00 35.00 MU musselsQuantityPrice ($)
c.(1 point) What will happen to the demand curve if a new study comes out showing shellfish and onions (ingredients inRihanna’s mussels) increase the risk of cancer? What will happen to the demand curve if instead a study comes out showing they reduce the risk of heart disease?
2.(3 points) Production. Rihanna using equipment that she rents for $150 and ingredients that cost $6.96 a serving for the first 5 servings; for additional servings, she can buy the ingredients at a discount for $6.00. (Note that she signed a lease and pays the rent regardless of how many dinners she serves; note that regardless of how much ingredients she buys for additional servings, she pays $6.96 for the ingredients for the first 5.) She hires workers at $20 each and finds that they produce servings according to the followingschedule:ServingsTotal Workers10.4020.8631.3942.0052.7063.5074.4385.4996.71108.12a.(1 points) Calculate andgraph the marginal cost of each serving. (Use a spreadsheet and show your calculations!) Why does the MC curve have the slope (up, down, or flat) that it does?
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