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Unformatted text preview: Ryan Oprea Econ 200, Fall 2009 Homework #3 This homework is due on the final day of classes. You may consult with others on the homework, but must turn in your own work (i.e. please don’t copy homework from others) and must list who you worked with on the homework. If there is insufficient information to answer a question, state a reasonable assumption that allows you to do so and use it when working through the problem. 1. You are the CFO of a firm that produces vases. Vase production depends on a lot of advance planning, meaning most decisions about output are made well ahead of time. As a result firms compete by determining their quantity of output. Each unit of output costs about three dollars to produce. Five years ago there were three vase makers in the market and each firm produced four units that year . The following year a sudden and unexpected war temporarily limited each firm’s production to only 3.952 units, resulting in a sudden temporary one percent increase in the market price. Since that time3....
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This note was uploaded on 09/29/2010 for the course ECON 200 taught by Professor Oprea during the Fall '09 term at University of California, Santa Cruz.
- Fall '09