Price Theory
Assignment 2 - Market Power
In Lumino City, the taxi industry is regulated by the Government Taxi Authority. A
company can only supply taxi services, in Lumino City, if it is issued a licence by the
Government Taxi Authority. (Note: A licence
Truc Trinh - S3605386
Price Theory Assignment 2
Two rms, Alpha Vineyard and Beta Winery, produce and sell wine. The demand for Alphas wine is
given by the equation,
QA = 200PA + PB.
In this equation, the price of Alphas wine is PA per bottle, and the pric
7/07/2017
IME International Monetary
Economics
Semester 2 2017
What is this course about
International Economics deals with the economic and financial interdependence
among nations its analyses the flows
of goods and services,
payments and currencies
be
Topic 3
Valuation
Part 1
Bonds
Overview
In this lecture we will discuss:
Sources of Finance
Bonds v. Shares
What Is A Bond & Bond Terminology
The Bond Pricing Model
Cost of Debt & Yield To Maturity, & Bond Prices
Interest Rate Risk
Yield Curves
E
Course Guide
BAFI 1002
FINANCIAL MARKETS
Semester 2 2017
City Campus
Course Coordinator
Dr Obaid Awan
Email: [email protected]
Teaching Staff Contact Details
Dr Vineet Tawani (Lecturer)
Dr Michael Gangemi (Tutor)
Mr Danny Moosa (Lecturer)
Ms Shi
FEEDBACK/TUTORIAL QUESTIONS
FINANCIAL MARKETS Topic 1:Introduction to Financial Markets
PART A
l.
2.
3.
Clearly distinguish between direct and indirect nancing.
What are the advantages of indirect (intermediated) nance to:
(a) borrowers,
(b) lenders, and
PRICE
A
S
S
I
THEORY
G
N
M
E
N
Assignment Instructions
Prepare your assignment in accordance with the following instructions:
1. Answer all questions.
T
01
2. Show all working.
3. All answers and equations must be typed.
4. All graphs must be computer gen
PRICE
A
S
S
I
G
THEORY
N
M
E
N
T
1
y
I
Py
yA
A
U1
BL1
0
xA
INSTRUCTIONS
I x
Px
&
QUESTIONS
Assignment Instructions
Prepare your assignment in accordance with the following instructions:
1. Answer all questions.
2. Show all working.
3. All answers and equa
lOMoARcPSD|1584435
Revision Notes, Macroeconomics 2 Curves
Macroeconomics 2 (RMIT)
Distributing prohibited | Downloaded by Xiao Liu ([email protected])
lOMoARcPSD|1584435
HOW TO DERIEVE THE AGGREGATE DEMAND CURVE
The AD curve is the combination of price (P
PriceTheory
Assignment2MarketPower
ThemarketfortaxitripsinLuminoCityhasthefollowingcharacteristics:Inverse
demandfortaxitripsisgivenbythefunction,
Q
P=90
1000
Question 1: Suppose that the Government Taxi Authority issues only one
license, to Big Ben Taxis
PriceTheoryAssignment1ConsumerTheory
Question1:FindSallyspetroldemandfunction,andSallysfooddemandfunction.
U(x,y)=xy+100y
X=Petrol
Y=Food
Px=priceofpetrol
Yx=priceoffood
Weknowthat consumers make purchasing decisions rationally and if we know the consumer
14-137MR Directors of Queensland lending business sentenced on
dishonesty
charges
Friday
20
June
2014
1-Mr Ronald David Williams and Mr Gary David Maile, former Directors of Selection One Finance
Pty Ltd (Selection One), were today sentenced in the Brisba
Price Theory
Lecture 3: Consumer Choice
The Budget Constraint
Denition: Budget Constraint
The set of baskets that a consumer can purchase with a limited amount of
income.
The budget constraint depends both on a consumers income, and on the
prices of goods
Price Theory Assignment 1
Suppose that Sallys preferences over baskets containing milk (good x), and coee (good y), are
described by the utility function U(x,y) = xy +2x. Sallys corresponding marginal utilities are,
MUx = y + 2 and MUy = x.
Use Px to repr
Price Theory
Assignment 2 Market Power
Firms 1 and 2 produce horizontally dierentiated products. The demand for rm 1s
product is given by the equation,
Q1 = 100 P1 +
P2
.
2
The demand for rm 2s product is given by the equation,
Q2 = 200 4P2 + 2P1 .
Firm 1
Price Theory
Lecture 6: Costs
Quick Quiz
What is an opportunity cost?
List some of the explicit and implicit costs associated with operating an airline.
Denition: Sunk Costs
Costs that have already been incurred and cannot be recovered.
Whether a cost is
Price Theory
Lecture 4: Theory of Demand
Demand
y
I
Suppose that good x is clothing, and that
good y is the composite good.
The solution to the constrained optimisation
problem tells us the quantity demanded of
clothing for a given price.
Px
I/3
(Px = 3)
Price Theory
Lecture 1: Foundations
Welcome to Price Theory
In this subject you will learn about the microeconomic foundations of all
economic (and nance) theory.
This is a subject about how individuals make decisions, and how these
decisions interact to
Price Theory
Lecture 9: Market Structure
many rms
Competitive Market
A market in which there is a single supplier
of the good or service is known as a
monopoly market.
A market in which two rms compete is
known as a duopoly market.
few rms
two rms
one rm
Price Theory
Lecture 7: Monopoly
Denition: Monopoly
A rm that is the sole seller of a product without close substitutes.
The fundamental cause of monopoly is barriers to entry a monopoly
remains the only seller in its market because other rms cannot enter
Price Theory
Lecture 2: Preferences
Consumer Preferences
Denition: Basket
A combination of goods and services that someone might consume.
Synonym: Bundle
A basket describes both which goods and services an individual consumes,
and the quantities consumed.
Price Theory
Lecture 8: Capturing Surplus
P
A prot maximising monopoly selects the
quantity of output for which marginal
revenue equals marginal cost.
P*
Consumer surplus under monopoly is the
area between the demand curve and the
monopoly price.
MC(Q)
Th
Price Theory
Lecture 5: Production
Production Functions
Economics views production as a process of transformation.
Commodities are acquired by a rm and transformed for sale to consumers in
an end product market.
The commodities that are used in the produc
Price Theory
Lecture 10: Game Theory
Denition: Game Theory
The study of strategic interaction; decision making when the payoff of each
decision maker depends on the actions of all decision makers.
Game theory is more complex than individual optimisation a
Price Theory
Assignment 1 Consumer Theory
Carbon dioxide (CO2 ) is emitted when drivers use petrol to power their cars. CO2 emissions are a negative externality of petrol use, as they contribute to global warming. One
way to correct this market failure is
ASSIGNMENT 2 MARKET POWER
Question 1: Suppose that the Government Taxi Authority issues only one
license, to
Big Ben Taxis. Assuming uniform pricing, and the quantity of taxi trips that
Big Ben
Taxis will choose to supply, and the price at which these tri
Assignment 1 Consumer Theory
U ( x , y )=xy +100 y .
MU x= yMU y=x+ 100
P x represent the price of petrol P y represent the price of food
1) Using the following formulas we can solve for x & y
P x (x )+ P y ( y )=I
P x ( x +100 )
y
Px
=
, y=
x +100 P y
Py
Price Theory Assignment 1
Saitheja Yellenki (s3541753)
1.
Solving for demand functions for good x and y with the information we have been given:
(
(
)
(
)
)
(
)
(a) Set marginal rate of substitution as equal to the ratio of prices
(b) Substitute marginal
PRICE
A
S
S
I
G
THEORY
N
M
E
N
T
1
y
I
Py
yA
A
U1
BL1
0
xA
INSTRUCTIONS
I x
Px
&
QUESTIONS
Assignment Instructions
Prepare your assignment in accordance with the following instructions:
1. Answer all questions.
2. Show all working.
3. All answers and equa
Question 1 :
The marginal rate of substitution of food or clothing,
MRS x , y
MU x
1
MU y 2 x
At an interior optimum, the marginal rate rate of substitution is
equal to the ratio of prices,
1
2 x
px
py
Rearranging the tangency condition give us,
p y 2 x