Econ PS2 - Emily Leung Friday 12:20 Owen Thompson November...

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Emily Leung Friday 12:20 Owen Thompson November 16 th , 2009 1. a. The demand curve has a negative slope because of diminishing marginal utility and satiation. When the consumers eat more and more pizza the value per pizza gradually decreases because they desire less pizza as they consume more pizza. b. Helen B. Carter will sell 5 pizzas at $19.68 and at $11.62 she will sell 10 pizzas. c. When a new doctor comes to town and tells people to avoid pizza, the demand decreases and the demand curve shifts inward to the left from the original demand curve. However, when Helen discovers a way to make her pizza taste even better the demand for the pizza will increase, and the demand curve will shift outward to the right. 2a. The marginal cost has an upward sloping because when there are more pizzas that Helen produces, she needs more workers, and more workers increase the labor costs. 2b. 3a. Helen will have to sell 8 pies at the price of $14.35 in a perfectly competitive market. 3b. The new prices under a monopolistic market is at 6 pizzas the price $18.12 3c.
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A perfect competition market is better with the consumers, but on the other hand the monopoly market is better for the businesses. Monopolistic markets are better for businesses because it is a higher price than the marginal costs while the output is also
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Econ PS2 - Emily Leung Friday 12:20 Owen Thompson November...

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