Homework4

# Homework4 - Homework#4 Due Date Wednesday April 13th Note...

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

Homework #4 Due Date: Wednesday, April 13th Note: Only one randomly selected question will be graded. Question 1 Consider a bottled water market which is a perfectly competitive market. The whole market demand function is Q = 60000 - 10000 P , and the supply function is Q = 20000 P . Azarka is producing the bottled water which is exactly same with other firms’ products. At first, Azarka invested \$100 to build a bottling factory. And then the cost to add n th product is \$0 . 01 × n . That is, to produce the first bottle of water costs \$0 . 01, to produce the second bottle of water costs \$0 . 02, and to produce the 100th bottle of water costs \$1. If you produce 3 bottles of water, the total cost is \$100 (cost for a factory) +0 . 01 (cost for the first one) +0 . 02 (cost for the second one) +0 . 03 (cost for the third one) = \$100 . 6. (a) Find the market equilibrium. (b) If Azarka sets its price as \$2 . 5, what is the quantity demanded for Azarka? If Azarka sets its price as \$1 . 5, what is the quantity demanded for Azarka? (Hint: when P = 0, the quantity demanded in the whole market is Q = 60000. This is a

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

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern