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microbook_3e-page123 - year The new vaccine will save lives...

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9. The first sushi restaurant opens in town. Initially people are very cautious about eating tiny portions of raw fish, as this is a town where large portions of grilled meet have always been popular. Soon, however, an influential health report warns consumers against grilled meat and suggests that they increase their consumption of fish, especially raw fish. The sushi restaurant becomes very popular and its profit increases. a. What will happen to the short-run profit of the sushi restaurant? What will happen to the number of sushi restaurants in town in the long run? Will the first sushi restaurant be able to sustain its short-run profit over the long run? Explain your answers. b. Local steakhouses suffer from the popularity of sushi and start incurring losses. What will happen to the number of steakhouses in the long run? Explain your answer. 11. A new vaccine against a deadly disease has just been discovered. Presently, 55 people die from the disease each
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Unformatted text preview: year. The new vaccine will save lives, but it is not completely safe. Some recipients die from adverse reactions. The projected effects of the inoculation are given in the accompanying table: percent of the pop. inoculated total deaths due to disease total deaths due to inoculation marginal benefit of inoculation marginal cost of inoculation “profit” of inoculation 0 55 0 – – – – 10 45 0 20 36 1 30 28 3 40 21 6 50 15 10 60 10 15 70 6 20 80 3 25 90 1 30 100 0 35 a. What are the interpretations of “marginal benefit” and “marginal cost” here? Calculate marginal benefit and marginal cost per each 10 percent increase in the rate of inoculation. Write your answers in the table. b. What proportion of the population should optimally be inoculated? c. What is the interpretation of “profit” here? Calculate the profit for all levels of inoculation. Page 123...
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