UploadedFile_129736076482015000

UploadedFile_129736076482015000 - ECONOMICS 5300 ASSIGNMENT...

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ECONOMICS 5300 ASSIGNMENT 3 THIS ASSIGNMENT COVERS MATERIAL IN CHAPTERS 5 AND 6 MONOPOLY AND MARKETS FOR HOMOGENOUS PRODUCTS – OLIGOPOLY 1. MONOPOLY PRICE AND QUANTITY EQUILIBRIUM – GIVEN THE GRAPH OF A MONOPOLIST FIRM SHOWING DEMAND, MARGINAL REVENUE, AVERAGE COST AND MARGINAL COST, IDENTIFY OR STATE THE EQUILIBRIUM OUTPUT LEVEL, THE EQUILIBRIUM MARKET PRICE, AND THE RENTS (PROFITS) TO THE MONOPOLY FIRM. PRICE Marginal cost Average cost Demand Marginal Revenue QUANTITY 2. A CHEMICAL FIRM MANUFACTURES PERFECTLY DIVISABLE VATS OF CHEMICALS AND SELLS THEM IN WHOLESALE CHEMICAL MARKETS. THE INVERSE DEMAND FOR THESE VATS IS GIVEN BY: P = 1000 -1.1Q FOR P = PRICE AND Q = VATS OR FRACTIONS OF VATS . THE TOTAL COST OF PRODUCING THE CHEMICALS IS GIVEN AS: TC = 0.10 + 4Q 2 DERIVE THE EQUILIBRIUM PRICE, P, THE EQUILIBRIUM NUMBER OF VATS, TOTAL REVENUE, MARGINAL REVENUE, MARGINAL COST, AND PROFIT FOR THIS FIRM.
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3. NOW A LITTLE INTERNATIONAL ECONOMIC FLAVOR AND MONOPOLY MARKETS GIVEN THE GRAPH BELOW OF A MONOPOLY STEEL COMPANY IN A NATION AND GIVEN THAT THE WORLD PRICE OF STEEL IS WHERE MARGINAL COST EQUALS DEMAND: PRICE Marginal cost MONOPOLY PRICE P M WORLD PRICE P W Average cost Demand Marginal Revenue Q STEEL QUANTITY OF STEEL a) IDENTIFY THE CONSUMER SURPLUS AND MONOPOLY PROFIT MEASURES OF ECONOMIC WELFARE, WHERE P M IS THE MONOPOLY PRICE, AND P W IS THE WORLD PRICE OF STEEL. b) GIVEN THE MONOPOLY AND WORLD PRICE CONDITIONS SHOWN IN THE GRAPH ABOVE, IS THIS NATION A STEEL IMPORTING OR STEEL EXPORTING NATION? GIVEN YOUR ANSWER, WOULD YOU PROJECT THIS NATION TO HAVE COMPARATIVE ADVANTAGE IN STEEL PRODUCTION RELATIVE TO STEEL PRODUCTION AROUND THE WORLD? EXPLAIN. c) IS CONSUMER ECONOMIC WELFARE IN THIS NATION INCREASED OR DECREASED BY INTERNATIONAL TRADE IN STEEL?
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d) WHAT HAPPENS TO CONSUMER SURPLUS IN THIS NATION IF COST CONDITIONS RESULT IN MARGINAL COST AND AVERAGE COST SHIFTING DOWNWARD AND OUTWARD (COST REDUCTIONS) AS A RESULT OF TECHNOLOGICAL CHANGE IN THIS NATIONS STEEL PRODUCTION PROCESSES? 4.
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This note was uploaded on 02/15/2012 for the course ECON 2110 taught by Professor Nate during the Spring '11 term at Utah Valley University.

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UploadedFile_129736076482015000 - ECONOMICS 5300 ASSIGNMENT...

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