This preview shows pages 1–2. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.
View Full Document
Unformatted text preview: 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:5, what is the quantity demanded for Azarka?...
View
Full
Document
This note was uploaded on 11/02/2011 for the course MATH 201 taught by Professor Doolittle during the Spring '11 term at Hawaii.
 Spring '11
 Doolittle
 Math

Click to edit the document details