2nd half multiple choice explanations

2nd half multiple choice explanations - Multiple choice...

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Unformatted text preview: Multiple choice explanations: Assignment 4 1. by de&nition 2. each &rm supplies according to Q = 2 + 3 P: Given that there are 5 &rms, the total supply at any price is 5 & Q; giving Q S = 10 + 15 P 3. by de&nition 4. by de&nition 5. by de&nition 6. standard result. Recall the approximate share of a tax paid by consumers: E s E s + j E d j 7. A price ¡oor sets the price above the market-clearing price. That means that some dairy farmers are unable to sell their milk, making them worse o/ 8. (see 7) 9. by de&nition 10. by de&nition 11. by de&nition 12. by de&nition 13. For complementary goods, an increase in the price of one decreases the demand for other, lowering the equilibrium price there. Thus, the relationship is downward-sloping 14. by de&nition 15. by de&nition Assignment 5 1. Pro&t-maximizing level of output: MR ( Q ) = MC ( Q ) 2. P & MC P = 1 j E d j : Substituting in values and rearranging gives P = 3 1 3 3. as discussed 4. as discussed 5. by de&nition 6. by de&nition 7. and 8. When a &rm achieves perfect price discrimination, it extracts all consumer surplus. as a result, it wants to maximize overall surplus and thus deadweight loss is eliminated 9. A &rm has market power when it faces a downward-sloping demand9....
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2nd half multiple choice explanations - Multiple choice...

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