# HW2_302 - Econ 302- Second Problem Set Spring 2011-Ali...

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Econ 302- Second Problem Set Spring 2011-Ali Toossi Due: Wednesday, February 9 (at the beginning of the class) All problem sets should be prepared neatly and professionally. Problem sets should be stapled and should contain the following information on the right-hand corner of the page: your name , your section , homework number and date . Problem sets that are sloppy, torn from spiral-bound notebooks, or which are illegible, or unstapled, will be graded down. Reservation price and demand: 1. Graph the demand curve for a consumer with a reservation price of \$30 for a unit of good. Assume the consumer is able to pay \$30. Marginal analysis: Discrete action 2- Suppose a farmer is deciding how many acres to spray. The crop duster charges \$7 per acre. The total benefit of spraying is given by the following chart: a. Use marginal analysis to determine how many acres the farmer should spray. b. If the crop duster adds a fixed fee of \$5 to come to the farm, how many acres should the farmer spray? c. If the crop duster raises his fee to \$10 per acre, how many acres should the farmer spray? Marginal analysis: Continuous action

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## This note was uploaded on 02/27/2011 for the course ECON 302 taught by Professor Avrin-rad during the Spring '09 term at University of Illinois, Urbana Champaign.

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HW2_302 - Econ 302- Second Problem Set Spring 2011-Ali...

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