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Tute_4 - Introductory microeconomics ECON1001 Tutorial 4...

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ECON1001 Tutorial 4 1 Introductory microeconomics ECON1001 Tutorial 4 Week 5 1. Freddie can make a widget for a marginal cost of $10. Harriet values the widget at $50. a. What is the maximum price Harriet is willing to pay? b. What is the minimum price Freddie is willing to sell the widget for? c. What is the consumer and producer surplus if the price is $25? What is the total surplus if the price is $10, $20 and $50? 2. Consider the following information on daily production and costs at Jackson’s Bakery Quantity (dozens of loaves) Total Cost (dollars 0 20 1 22 2 26 3 32 4 40 5 50 6 62 7 70 a) Calculate the marginal cost for Jackson’s bread production b) Draw the supply curve for Jackson’s Bakery c) Jackson’s Bakery can sell as many loaves as she wants in the market at a price of $12 for a dozen of loaves. How many loaves will she sell each day? Use your diagram to how much producer surplus Jackson’s Bakery receives. 3. Consider the demand function to be qd = 100 – 5P and the supply function to be qs = 5P.
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