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Unformatted text preview: ECON 103, Spring 2009 Simon Fraser University Assignment 2 Due in tutorials in the week of February 9 th Do Problem 36 from chapter 7, p.160. (4 marks) Question 1 (4 marks) On p. 119 of the textbook (paragraph 3 from the top) it says that Darlenes sellers surplus is the difference between the total revenue she gets and her total value of the eggs she sells. Explain clearly why we have to subtract her TV from TR in order to calculate her surplus. After all, she managed to sell 15 eggs at P = 10 cents each, so technically when she comes back home from the market she has $1.50 in her pocket. How come her gains from trade are only 45 cents? (Hint: you might start with explanation of what is the meaning of sellers surplus and what it is supposed to measure. One more hint: gains from trade.) Question 2 (4 marks) Producers of peanuts discover a new technology that allows them to double yield per acre of land without increasing the production cost. Even if almonds and peanuts are substitutes, market for almonds should not be affected by this change because de-...
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This note was uploaded on 09/13/2009 for the course ECONOMICS Econ 103 taught by Professor Iryina during the Spring '09 term at Simon Fraser.
- Spring '09