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Unformatted text preview: 10 20 15 10 5 5 D ATC M C $ Gizmos (Thousands of Units) Profit = TR TC = PQ ATC(Q) = (P ATC)Q = (15 5)(20,000) = 200,000 Profit = TR TC = PQ ATC(Q) = (P ATC)Q = (12 5.50)(26,000) = 169,000 EU(Use Dr ugs) = p(400) + (1p)(200) = p(150) + (1p)(50) = EU(Dont Use Dr ugs) 200 600p = 50 + 100p p = 150/700 = 0.214 or 21.4 percent EU(DRUG TEST) = p(200) + (1p)(100) = p(200) + (1p)(200) = EU(NO DRUG TESTI NG) 100 + 100p = 200  400p p = 100/500 = 0.200 or 20.0 percent S) = 0.214 0.20 = 0.043 or 4.3 percent ting t o random dr ug t esting, the league reduces player dr ug use by 80 percent at relatively modest cost, t esting only 21.4 percent of th  2.46/1.56 < 2 We cannot reject the possibility that 3 may be equal to zero. 4 = ln QX/D I = ( QX/ I )(I /Q) = EQx,I % Qx = EQx,I %$ I = 0.05 10 = 0.50 of output. The inverse demand cur ve is P = 100 Q. The fir m may extract all consumer sur plus with a membership fee equal to Q = 4,400/4 = 1100 1,100) = 2,400,000 + 200(1,100) + (1,100)2 = 3,830,000 : 1,100 = 3,900 Profit = 3,900(1,100) 3,830,000 = 460,000 1,100 = 1,900 Profit = 1,900(1,100) 3,830,000 = 1,740,000 Profit = 0.8(460,000) + 0.2(1,740,000) = 20,000 n = {(460,000 20,000)2(0.8) + (1,740,000 20,000)2(0.2)}1/2 = 880,000  MRTS = MPL/MPK = 20/40 > 100/220 = w/r ve B. Jack, aware of this fact, will choose Move X. The joint outcome will be (55,70), or a payoff of 55 for Jill and 70 for Jack. he will opt for Move A. Jacks response will be Move Z. The joint outcome will be (65,65), or a payoff of 65 for Jill and 65 for Jack. 4(10) = 60. I f we bundle 60 units of output int o a block, and charge a per unit pr ice = (25 + 10)/2 = 17.50/unit, we have a block pr ice eq We have: 4QA + 2QB = 1,850 2QA + 4QB = 2,500 Solving these two equations in two unknowns: QA = 200 and QB = 525. Q = 725. Pr icing: PA = 2,350 200 = 2,150 and PB = 3,000 525 = 2,475 Total Revenue = 2,150(200) 2,475(525) = 1,729,375 Total Cost C(725) = 800,000 + 500(725) + (725)2 = 1,688,125 Profit = 1,729,375 1,688,125 = 41,250 H F C A G 1 2 2 1 1 1 2 (150, 210) (160, 200) 2 (200, 220) (230, 170) 2 (200, 240) (150, 220) 2 (150, 150) (180, 100) E H G C F H G D E H A G F H G E H B G C F H G D E H RBlonds = MRBr unettes + 1/(2.0))(30) = (1 + 1/(1.5))PBr unett es Br unettes = 3(15) = 45 G F H nt random wealth satisfies = EU(W) 579.57 ount he would be willing to reduce his expected wealth t o avoid r isk, is: $1,725,570.57 = $728.43 premium which is at least equal t o the expect ed loss: = 0.001(1,701,000) = $1,701 willing to pay is: 429.43 S 10 5 5 10 20 15 P D Old = (12)(12) (14)(14) = 72 98 =  26 Old = (12)(6) (14)(7) = 36 49 =  13 TR = 3(12) = 36 PS + TR = 13  26 + 36 = 3 4(125) = 500. Profit = 500(125) [10,000 + 600(125)] = 62,500 85,000 = 22,500....
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 Summer '09
 HOLLAND
 Economics

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