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Unformatted text preview: EC313-Fall 2010 Problem Set 2 (Updated 18 August 2010) Matt Turner When you write up your answers, your goal should be to (1) be correct, and (2) convince your reader that your answer is correct. Answers which do not achieve these goals will not be awarded full credit. To accomplish the second objective, it is helpful if your work is legible and if all steps are presented, possibly with a line of explanation. Problems 1. Suppose that the willingness to pay for seal products, y t , at time t , is given by P ( y t ) = 100- y t , and that the marginal cost of producing seal products is line with slope 1 and fixed costs are zero (so that the supply curve is a line through the origin with slope one). The government is considering an increase in the quota on seal products from 25 to 50. (a) Find the social surplus associated with both policies. (b) Calculate the yearly benefits of switching from the smaller to the larger quota....
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This note was uploaded on 11/04/2010 for the course ESC 313 taught by Professor M during the Fall '10 term at University of Toronto.
- Fall '10