2011HW2 - Economics 104B Problem Set#2(Due April 28 Spring...

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

View Full Document Right Arrow Icon
Economics 104B Problem Set #2 (Due April 28) Spring 2011 1. There are five firms each of which has cost function C ( q ) = 40 q - 24 q 2 + 4 q 3 . The inverse demand function for the industry’s output is p d ( Q ) = 19 - Q . Find the competitive equilibrium. 2. Assume that the taxi industry in New York city is competitive. Also assume that the marginal cost of a taxi ride is constant and equal to $5 per trip and that each taxi is capable of making 20 trips a day. Let the demand function for taxi rides each day be D ( p ) = 1100 - 20 p . a. Find the daily competitive equilibrium price of a taxi ride. b. How many rides will the citizens of New York make each day? c. How many taxis will operate in New York? d. Suppose now that every taxi operating in New York is required to have a special license and the number of such licenses is equal to the number of taxis you calculated in part c. Suppose further that the demand for taxi rides has increased to D ( p ) = 1200 - p . Calculate the new competitive equilibrium price and the daily profit of each taxi.
Image of page 1

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

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

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    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.

    Student Picture

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

  • Left Quote Icon

    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.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    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.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern