hw1.s09 - (BTW for graphs you want to use an EXCEL spreadsheet put Q on x-axis and graph every integer of Q You also want to show your work in great

ENNEC 100 Spring 2009 Homework 1 Due in class February 10. Please show all your work. Homeworks must be typed, on one side of the page and stapled. No hand written assignments will be graded. 1) (30 points) Barack Obama and Bill Clinton are stuck together on a desert island. There are two goods, turtles (T) and bananas (B). Barack has production function 2T+B=100, while Bill has production function T+4B=300. If they could not trade, Barack would choose to product 35T, while Bill would produce 40B. Now Barack and Bill meet. Explain a production/trade combination that would make both better off. 2) (40 points) The supply of widgets is Q=-100+2P. The demand is Q=800-3P. Graph the wealth created by production in this market when Q goes from 200 to 300.

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Unformatted text preview: (BTW, for graphs, you want to use an EXCEL spreadsheet, put Q on x-axis, and graph every integer of Q. You also want to show your work in great detail.) 3) (30 points) Five buyers in the widget market, have demand prices for widgets as shown below: Buyer Widget 1 Widget 2 Widget 3 1 98 90 78 2 113 100 70 3 90 85 80 4 105 97 83 5 150 100 70 How much wealth do these buyers gain in this market as the price of widgets ranges from 75 to 125? Please draw a nice graph showing this. (Same rules as above. Lots of paper for this one. BTW, it helps to understand the “@MAX” command in EXCEL for this question.)...
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