PS+9 - ARE100A INTERMEDIATE MICROECONOMICS: THEORY OF...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
ARE100A INTERMEDIATE MICROECONOMICS: THEORY OF PRODUCTION AND CONSUMPTION FALL QUARTER 2009 Problem Set 9 Due Thursday November 19 at the beginning of class 1. Last year Ford Motor company lost $5billion and they will have lost another few billion this year. Why don’t they just shut down and save a lot of losses? 2. Explain which factor of production and who earns the economic rent in each of these cases. a. I grow the sweetest peaches at the farmers market and get a very high price because I know the secret of when and how to fertilize. b. I grow the sweetest peaches at the farmers market and get a very high price because I own a peach field near Davis that has a perfect microclimate. c. I grow the sweetest peaches at the farmers market and get a very high price because I lease a peach field near Davis that has a perfect micro-climate. 3. The industry supply function is Q = -1000 + 200P. The product from this industry has perfect substitutes and industry demand may be written as P = $20 per unit. a. Draw the equilibrium showing producer surplus and variable cost.
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.
Ask a homework question - tutors are online