Problem Set 3 - Dept of Economics University of Iowa Fall...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Dept of Economics Fall 2010 University of Iowa Professor Sarah Frank 06E:001:SCB Principles of Microeconomics Problem Set 3 Due Tuesday, October 19 in class 1) How would each of the following developments affect the equilibrium price and quantity in the market for apples in the short run? How would each affect the quantity of apples that a typical profit-maximizing apple farm wants to produce in the short run? You should assume the market for apples is perfectly competitive. a. The wages paid to apple farm employees rises. b. New medical evidence suggests that apples decrease cancer. c. The government imposes a lump sum tax on all apple farms. 2) Suppose you own a bakery. You own the building and the ovens, which are worth $50,000. Each year you pay an employee $30,000 and you spend an additional $10,000 on flour, yeast and salt. You charge $5 a loaf, and last year you sold 8,400 loaves of bread. The interest rate on a government bond is 5%. Are you earning an accounting profit? Are you earning an economic
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 09/26/2011 for the course 06E 001 taught by Professor Stuff during the Fall '10 term at University of Iowa.

Page1 / 2

Problem Set 3 - Dept of Economics University of Iowa Fall...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online