Problem Set 1 - FRE/ECON374 Problem set 1 Due: 4 PM,...

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FRE/ECON374 Problem set 1 Due: 4 PM, Friday, September 23rd, 2005 Instructions: a) Your grade on this problem set will be determined by randomly grading a single problem from the set below. It is thus important to do each question carefully as any one problem could determine your grade. b) Problem sets are to be handed in at the beginning of class. Please do not upload your problem sets in webct. c) Any problem set received after the time it is due will not be graded. d) Please label and mark all graphs clearly. 1. A little village wants to invest in an aqueduct system. The aggregate inverse demand from the villagers is p = 20 – 2Q. The total cost of the system is defined by the following equation: TC = 5Q + 1/2Q 2 . a) Show graphically the equilibrium price and quantity. Identify the consumer and producer surpluses. b) Compute the consumer and producer surpluses. What is the social surplus generated by the new system?
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This note was uploaded on 11/29/2010 for the course ECONOMICS 300-400 taught by Professor Varies during the Spring '10 term at Cornell University (Engineering School).

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Problem Set 1 - FRE/ECON374 Problem set 1 Due: 4 PM,...

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