ECON101 Lecture 6: ECON 101 Lecture 6

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orchiddonkey137

24 Sep 2018

School

University of Alberta

Department

Economics

Course

ECON101

Professor

Gordon Lee

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ECON101 Lecture Notes - Lecture 5: Ceteris Paribus, Demand Curve

ECON101 Lecture 6: ECON 101 Lecture 6

ECON101 Lecture 7: Supply, Supply Curves, & Equilibrium

Document Summary

Taxesare anadditiontoproduction costs andresult in decreasedsupply industrial migration intertemporalmigration shutdowntemporarilybecausefuturetaxwilllower. If thepriceto asubstitute in production forgoodxincreasesdecreasesthesupplyofgoodx decreases increases. Cgsupposecorn wheatcanbe grown onthesamelandthenif thepriceofcornrisesfarmers thusthesuppl of wheatfalls switchtocornawayfromwheat. 7 prices of complements in production complements in production are alsocalledjointproduc theyare productswhichbythenature in productionforgoodxincreases ofproduction areproduced togetherwhenpriceof a decreases thesupplyofgoodxincreases decreases. Naturaleventssuchas frostsfloodshurricanescanhavesignificantimpactsuponthesupplyof a product goodweathercanalso changethesupplyof a product comtsplement. Equilibrium iseasyto determine on table of numbers also. Thismodelworks for foreign exchange markets and stockmarkets ingeneral because theycanadjustquickly and are able to clearcreach equilibrium. However it doesnotworkfor labourmarket and durable markets durablegoods because clearing oftheformermarketmeans no unemployment impossible and it is notconvenienttoclear durablemarkets peoplewant choice whenpickingdurablegoodstocompare it is notquicktransactions. The shortages andsurpluses presented in the modelgives us direction. Meaning one equilibrium to another after somevariable exchange. Partialequilibrium one ortwo effectsaftereventnoteveryeffectthat snowballs suppliersrespondto theincreasedprice upwardspressure can"tmoveboth atthesametime ineed. Equilibrium priceinandquantityhave increased partial equilibrium suppliers respondby t pricecpressure one or towo eelectsnot huy. 1 general can"tprove two at the s aan time.

Related Questions

Explain implicit and explicit costs as applied to profit. Include examples to support your explanation. 2. Explain âTotal costs increases as output expands. But the rate of cost increase varies.â Explain with an example. 2. Explain, âFor perfectly competitive firms, profits are maximized at the rate of output where price equals marginal costâ Remember profit is considered a cost. Explain with an example. 3. Explain why supply is affected by: 1. The price of factor inputs-labor, capital, resources. 2. Technology â for example computers and robots. 3. Expectations- what is going to happen with the demand for the product thus supply. Ex. a recession 4. Taxes and subsidies-include examples. 5. If one firm making and selling X product and is earning excessive profits how will the eventually effect the market price and the supply of the product? Page 519

1. Select the scenarios that result in lower prices if they were to occur in isolation?

a. Higher technology, fall in the price of a substitute, decrease in the price of a complement

b. Higher productivity, lower taxes on corporations, lower expected future prices

c. Higher income for inferior goods, higher subsidies for firms, increase in tastes and preferences

d. Lower costs of production, fall in the price of substitute, reduction in consumer subsidies

2. If the price of substitute increased the result would be __________ prices, and we would say__________

a. an increase in prices, quantity demanded increased

b. an increase in prices, demand increased

c. a decrease in prices, demand decreased

d. a decrease in prices, supply increased

3. Consumers can make costly mistakes when not enough information is available. Which of the following represents a market solution to obtaining costly information?

a. Franchises

b. Advertising

c. Third party verification

d. All of the above

Globo Public Supply has $1,000,000 in assets. Its demand curve is: P= 206 - .20 * Q and its total cost function is: TC = 20,000 + 6 * Q where TC excludes the cost of capital. If Globo Public Supply is UNREGULATED, find Globos optimal price.

A. $206

B. $107

c. $56

D. $6

e. $3

A monopolist faces tge follownig demand curve: P= 12- .3Q with marginal costs of $3. What is the monopolistic price?

a. P=$5.50

B. P=$6.50

c. P=$7.50

d. P=$8.50

e. P=$9.50

A monopoly will always produce less than a purely competitive industry, ceteris paribus.

a. true

b. false

The demand curve facing the firm in _____ is the same as teh industry demand curve.

a. pure competition

b. monopolistic competition

c. oligopoly

d. pure monopoly

e. none of the above

Suppose that in a perfectly competitive industry the equilibirum industry quantity is 10,000 units. Suppose that the monopoly output is 5,000. For a 2 firm Cournot Oliopoly (N=2) known as a duopoly, what is a likely Cournot QUANTITY for the industry?

a. 3000 units

b. 5000 units

c. 6667 units

d. 10000 units

e. 15000 units

A manufacturer produces two types of computer softwware, Word processing (W) and spreadsheet (S), which is offered to two different retail outlets (#1 and #2). The following table shows the max price each retail outlet is willing to pay for each individual software product.

Retail #1 Product W $170 Product S $105

Retail #2 Product W $95 Product S $135

What is the optimal pricing strategy that will maximizerevenue for the manufacturer, given the maximum the retail outlets are willing to pay?

a. budnel both products (W and S) and sell them at $230

b. price product w at $170 and product s at $135

c. price product w at $170 and product s at $170

d. price product w at $95 and product s at $105

e. bundle both products (w and S) and sell them at $275

ECON101 Lecture 6: ECON 101 Lecture 6

ECON101 Lecture Notes - Lecture 5: Ceteris Paribus, Demand Curve

ECON101 Lecture 6: ECON 101 Lecture 6

ECON101 Lecture 7: Supply, Supply Curves, & Equilibrium

Document Summary

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