homework6spring2011

Homework6spring2011

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Unformatted text preview: y
curve,
the
MSC,
and
the
demand
 curve.
Use
your
notes
to
identify
the
DWL
on
this
graph.)
 
 4.

 First
Degree
Price
Discrimination:
Suppose
the
market
demand
for
psychics
is
 given
by
the
equation:
P
=
105
‐
2Q.
Currently,
there
are
many
psychics
in
the
 market,
and
because
there
is
so
little
cost
to
being
a
psychic,
the
market
is
 perfectly
competitive.
The
marginal
cost
of
being
a
psychic
is
$5.

 a. Graph
the
demand
and
marginal
cost
for
the
psychic
market.
 b. Calculate
the
equilibrium
quantity
of
psychic
consultations
in
this
 market.
 c. What
are
the
producer,
consumer,
and
total
surpluses?
Label
them
on
 your
graph.
 
 Scientists
have
come
out
with
a
new
test
to
determine
with
100%
accuracy
 whether
or
not
someone
is
a
psychic.
After...
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This note was uploaded on 12/04/2013 for the course ECONOMICS 101 taught by Professor Kelly during the Spring '10 term at Wisconsin.

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