penn101_09s_hw3

penn101_09s_hw3 - Intermediate Microeconomics (Econ 101)...

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Intermediate Microeconomics (Econ 101) Spring, 2009 Assignment 3 This assignment is due no later than Tuesday March 5 at the end of class. 1. Workouts 15.9, 16.12, 18.3, 18.10, 19.10, 20.3, 21.8 2. Additional Problems Question 1. Suppose that the inverse demand function in the entire world for wool is p = A q for some constant A . Suppose that 1/2 of the world’s wool is produced in Australia. (1) If Australian wool production increases by 1% and the rest of the world holds its output constant, what will be the eﬀect on the world price of wool? (2) Derive the marginal revenue function for the wool production of Australia. How does it relate to the price of wool? Question 2. The market demand function is given by q = 10 - 2 p and the market supply function is q = 5+3 p . (1) Calculate the equilibrium price and quantity. (2) Suppose the government imposes a quantity tax of \$ 1 per unit. Calculate the change in consumer surplus and the change in producer surplus. (3) Calculate the deadweight loss resulted from this quantity tax.

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This note was uploaded on 09/27/2009 for the course ECON 101 taught by Professor Dannicatambay during the Spring '08 term at UPenn.

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penn101_09s_hw3 - Intermediate Microeconomics (Econ 101)...

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