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penn101_09s_hw4 - Intermediate Microeconomics(Econ 101...

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Intermediate Microeconomics (Econ 101) Spring, 2009 Assignment 4 This assignment is due no later than Tuesday March 31 at the end of class. 1. Workouts 22.2, 23.8, 24.5, 27.7, 31.1 2. Additional Problems Question 1. True/false, and justify your answer. (1) The possibility of more firms entering an industry in the long run tends to make long-run industry supply more price elastic than short-run industry supply. (2) If some firm in an industry has the production function f ( x, y ) = x 3 4 y 3 4 , where x and y are the only two inputs in producing the good, then that industry cannot be competitive in the long run. (3) The market for a good is in equilibrium when the government unexpectedly imposes a quantity tax of 2 per unit. In the short run, the price will rise by 2 per unit so that firms can regain their lost revenue and continue to produce. (4) The bicycle industry is made up of 100 firms with the long-run cost curve C ( y ) = 2 + y 2 2 and 120 firms with the long-run cost curve C ( y ) = y 2 4 . No new firms can enter the industry.
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