Principles Of Economics 3rd Edition Moore Mcdowell - Solutions

What exactly does 'profit' mean, and how is it measured?
Suppose each of the 1 million Islandian households has the same demand curve for heating oil.a. What is the household demand curve?b. How much consumer surplus would each household lose if it had to pay 2 per litre instead of 1 per litre for heating oil, assuming that there were no other changes in
Refer to Problem
The government of Islandia, a small island nation, imports heating oil at a price of 2 per litre and makes it available to citizens at a price of 1 per litre. If Islandians' demand curve for heating oil is given by P=6 Q, where P is the price per litre in euros and Q is the quantity in millions of
Phil's demand curve for visits to a private-sector health clinic is given by P= 48 8Q, where P is the price per visit in euros and Q is the number of visits per season. The marginal cost of providing medical services at the clinic is 24 per visit. Phil has a choice between two health policies, A
The municipal waterworks of Cortland draws water from two sources: an under- ground spring and a nearby lake. Water from the spring costs 2 cents per 100 litres to deliver, and the spring has a capacity of 1 million litres per day. Water from the lake costs 4 cents per 100 litres to deliver and is
In Dubrovnik, Croatia, citizens can get their electric power from two sources: a hydroelectric generator and a coal-fired steam generator. The hydroelectric gen- erator can supply up to 100 units of power per day at a constant marginal cost of 1 cent per unit. The steam generator can supply any
Is a company's producer surplus the same as its profit? (Hint: A company's total cost is equal to the sum of all marginal costs incurred in producing its output, plus any fixed costs.)
Suppose the weekly demand for a certain good, in thousands of units, is given by the equation P=8Q, and the weekly supply of the good is given by the equation P=2+Q, where P is the price in euros.a. Calculate the total weekly economic surplus generated at the market equilibrium.b. Suppose a
The Kubak crystal caves are renowned for their stalactites and stalagmites. The warden of the caves offers a tour each afternoon at 2 pm sharp. The caves can be shown to only four people per day without disturbing their fragile ecology Occasionally, however, more than four people want to see the
Refer to Problem 1. Suppose a coalition of students from a Brussels secondary school succeeds in persuading the local government to impose a price ceiling of 6.50 on used DVDs, on the grounds that local suppliers are taking advantage of teenagers by charging exorbitant prices.a. Calculate the
Suppose the weekly demand and supply curves for used DVDs in Brussels are as shown in the graph below. Calculate:a. the weekly consumer surplusb. the weekly producer surplusc. the maximum weekly amount that producers and consumers in Brussels would be willing to pay to be able to buy and sell used
Why do price ceilings reduce economic surplus?
Why is compensating volunteers to relinquish their seats on overbooked flights more efficient than a policy of first-come, first-served?
Why does the loss in total economic surplus directly experienced by participants in the market for a good that is taxed overstate the overall loss in economic sur plus that results from the tax?
You are a politician considering how to vote on a policy that would increase the economic surplus of workers by 100 million per year but reduce the eco- nomic surplus of retirees by 1 million per year. What additional measure might you combine with the policy to ensure that the overall result is a
Why do economists emphasise efficiency as an important goal of public policy?
For the pizza seller whose marginal, average variable and average total cost curves are as shown in the diagram below (the same seller as in Problem 9), what is the profit-maximising level of output and how much profit will this producer earn if the price of pizza is 1.18 per slice?
For the pizza seller whose marginal, average variable and average total cost curves are as shown in the diagram below, what is the profit-maximising level of output and how much profit will this producer earn if the price of pizza is C0.50 per slice?
For the pizza seller whose marginal, average variable and average total cost curves are as shown in the diagram below, what is the profit maximising level of output and how much profit will this producer earn if the price of pizza is 0.80 per slice?
For the pizza seller whose marginal, average variable and average total cost curves are as shown in the diagram below, what is the profit-maximising level of output and how much profit will this producer earn if the price of pizza is 2.50 per slice?
Calculate daily producer surplus for the market for pizza whose demand and sup ply curves are shown in the graph below.
The supply curves for the only two firms in a competitive industry are given by P =201 and P=2+ Q2, where Q1 is the output of firm 1 and Q2 is the output of firm 2, What is the market supply curve for this industry? (Hint: Graph the two curves side by side, then add their respective quantities at a
In Question 3, how would Paducah's profit-maximising level of output be affected if the government imposed a tax of 10 per day on the company? (Hint: Think of this tax as equivalent to a 10 increase in fixed cost.) What would Paducah's profit- maximising level of output be if the government imposed
The Paducah Slugger Company makes baseball bats out of lumber supplied to it by Acme Sporting Goods, which pays Paducah 10 for each finished bat. Paducah's only factors of production are lathe operators and a small building with a lathe. The number of bats per day it produces depends on the number
Its total cost information is given in the table below.
A price-taking firm makes air conditioners. The market price of one of its new air conditioners is
Zoe is trying to decide how to divide her time between her job as a wedding photo- grapher, which pays 27 per hour for as many hours as she chooses to work, and as a fossil collector, in which her pay depends both on the price of fossils and the number of them she finds. Earnings aside, Zoe is
Why do we use the vertical interpretation of the supply curve when we measure producer surplus?
True or false? The perfectly competitive firm should always produce the output level for which price equals marginal cost.
Economists often stress that congestion helps account for the law of diminishing returns. With this in mind, explain why it would be impossible to feed all the people on Earth with food grown in a single flowerpot, even if unlimited water, labour, seed, fertiliser, sunlight and other inputs were
Which do you think is more likely to be a fixed factor of production for an ice cream producer during the next two months: its factory building or its workers who operate the machines? Explain.
Explain why you would expect supply curves to slope upwards on the basis of the Principle of Increasing Opportunity Cost.
The buyers' side of the market for amusement park tickets consists of two con sumers whose demands are as shown in the diagram below.a. Graph the market demand curve for this market.b. Calculate the total consumer surplus in the amusement park market if tickets sell for 12 each.
Tom's total utility is the sum of the utility he derives from pizza and movie rentals. If these utilities vary with the amounts consumed as shown in the table below, and pizzas and movie rentals are again consumable only in whole number amounts, how many pizzas and how many movie rentals should Tom
Refer to Problem
Tom has a weekly allowance of 24, all of which he spends on pizza and movie rentals, whose prices are C6 per slice and C3 per rental, respectively. If slices of pizza and movie rentals are available only in whole number amounts, list all the possible combinations of the two goods that Tom can
For the demand curve shown in the graph, find the total amount of consumer surplus that results in the petrol market if petrol sells for 2 per litre.
Anna Lucia lives in Cremona and commutes by train each day to her job in Milan (20 round trips per month). When the price of a round trip goes up from C10 to 20, she responds by consuming exactly the same number of trips as before, while spending C200 per month less on restaurant meals.a. Does the
Sue gets a total of 20 utils per week from her consumption of pizza and a total of 40 utils per week from her consumption of yoghurt. The price of pizza is 1 per slice, the price of yoghurt is 1 per carton, and she consumes 10 slices of pizza and 20 cartons of yoghurt each week. True or false: Sue
Toby's current marginal utility from consuming peanuts is 100 utils per gram and his marginal utility from consuming cashews is 200 utils per gram. If peanuts cost 10 cents per gram and cashews cost 25 cents per gram, is Toby maximising his total utility from the two kinds of nuts? If so, explain
Martha's current marginal utility from consuming orange juice is 75 utils per centilitre and her marginal utility from consuming coffee is 50 utils per centilitre. If orange juice costs 25 cents per centilitre and coffee costs 20 cents per centilitre, is Martha maximising her total utility from the
You are having lunch at an all-you-can-eat buffet. If you are rational, what should be your marginal utility from the last morsel of food you swallow?
In which type of restaurant do you expect the service to be more prompt and courteous: an expensive gourmet restaurant or an inexpensive diner? Explain.
Show, using indifference curves, how a price rise for one good affects consump- tion of that good (a) by lowering the consumer's real income, and (b) by altering relative prices of the two goods.
Show how the concept of consumer rationality is the same whether you use DMU or indifference curves to explain demand curves.
Give examples of cardinal and ordinal measurements.
Give an example of a good that you have consumed for which your marginal utility increased with the amount of it you consumed.
Explain why a good or service that is offered at a monetary price of zero is unlikely to be a truly 'free' good from an economic perspective.
Why does the law of diminishing marginal utility encourage people to spread their spending across many different types of goods?
Explain why economists consider the concept of utility useful, even if psycholo- gists cannot measure it precisely.
Why do economists prefer to speak of demands arising out of 'wants' rather than 'needs'?
In an attempt to induce citizens to conserve energy, the government enacted regu- lations requiring that all air conditioners be more efficient in their use of electricity After this regulation was implemented, government officials were then surprised to discover that people used even more
At point A on the demand curve shown below, by what percentage will a 1 per cent increase in the price of the product affect total expenditure on the product?
What are the respective price elasticities of supply at A and B on the supply curve shown in the graph below?
A 2 per cent increase in the price of milk causes a 4 per cent reduction in the c quan tity demanded of chocolate syrup. What is the cross-price elasticity of demand for milk with respect to the price of chocolate syrup? Are the two goods complements or substitutes?
Is the demand for a particular brand of car, such as a Ford or a Volkswagen, likely to be more or less price elastic than the demand for all cars? Explain.
The schedule below shows daily purchases of bags of pommes frites bought in Leuven in Belgium, at a variety of prices.
What will happen to the equilibrium price and quantity of apples if apples are dis- covered to help prevent colds and a fungus kills 10 per cent of existing apple trees?
Suppose the current issue of the Le Monde reports an outbreak of mad cow disease in the Dordogne as well as the discovery of a new breed of chickens that gain more weight than existing breeds that consume the same amount of food. How will these developments affect the equilibrium price and quantity
How will a new law mandating an increase in required levels of automobile insur- ance affect the equilibrium price and quantity in the market for new automobiles?
What will happen to the equilibrium price and quantity of beef if the price of chicken-feed increases?
How will an increase in immigration affect the equilibrium price of land?
What will happen to the equilibrium price and quantity of olives in Italy if the wage paid to olive pickers rises?
Indicate how you think each of the following would shift demand in the indicated market:a. Incomes of buyers in the market for Spanish sun holidays increase.b. Buyers in the market for pizza read a study linking hamburger consumption to heart disease.c. Buyers in the market for CDs learn of an
How would each of the following affect the EU market supply curve for wheat?a. A new and improved crop rotation technique is discovered.b. The price of fertiliser falls.c. The EU Commission offers new subsidies to farmers growing wheat.d. A tornado sweeps through northern France in July.
Why is efficiency an important social goal?
Why is supply elasticity higher in the long run than in the short run?
Why do economists pay little attention to the algebraic sign of the elasticity of demand for a good with respect to its own price, yet pay careful attention to the algebraic sign of the elasticity of demand for a good with respect to another good's price?
Why does the elasticity of demand for a good with respect to its own price decline as we move down along a straight-line demand curve?
Why does a consumer's price elasticity of demand for a good depend on the frac- tion of the consumer's income spent on that good?
Give an example of behaviour you have observed that could be described as 'smart for one, dumb for all'.
Explain the distinction between the horizontal and vertical interpretations of the demand curve.
Last year a government official proposed that motor fuel price controls be imposed to protect the poor from rising motor fuel prices. What evidence could you consult to discover whether this proposal was enacted?
Distinguish between the meaning of the expressions 'change in demand' and 'change in the quantity demanded'.
a. Is the point (30 kg of coffee per day, 12 kg of nuts per day) an attainable point? Is it an efficient point? What about the point (24 kg of coffee per day, 24 kg of nuts per day)?
Refer to the two-person economy described in Problem
Susan can pick 4 kg of coffee in an hour or 2 kg of nuts. Tom can pick 2 kg of cof- fee in an hour or 4 kg of nuts. Each works 6 hours per day.a. What is the maximum number of kg of coffee the two can pick in a day?b. What is the maximum number of kg of nuts the two can pick in a day?c. If Susan
Refer to Problem 7 to explain what is meant by the following statement: 'An increase in productivity with respect to any one good increases our options for producing and consuming all other goods."
Show how this development shifts her PPF.
Suppose that in Problem 5 a sewing machine is introduced that enables Helen to sew 8 dresses per hour rather than only
Which of the points listed below is efficient? Which is attainable?a. 28 dresses per day, 16 loaves per day.b. 16 dresses per day, 32 loaves per day.c. 18 dresses per day, 24 loaves per day.
Refer to Problem
Consider a society consisting only of Helen, who allocates her time between sew- ing dresses and baking bread. Each hour she devotes to sewing dresses yields 4 dresses, and each hour she devotes to baking bread yields 8 loaves of bread. If Helen works a total of 8 hours per day, graph her PPF.
Nancy and Bill are auto mechanics. Nancy takes 4 hours to replace a clutch and 2 hours to replace a set of brakes. Bill takes 6 hours to replace a clutch and 2 hours to replace a set of brakes. State whether anyone has an absolute advantage at either task and, for each task, identify who has a
Toby can produce 5 litres of apple cider or 2.5 kg of feta cheese per hour. Kyle can produce 3 litres of apple cider or 1.5 kg of feta cheese per hour. Can Toby and Kyle benefit from specialisation and trade? Explain.
Ted can wax a car in 20 minutes or wash a car in 60 minutes. Tom can wax a car in 15 minutes or wash a car in 30 minutes. What is each man's opportunity cost of washing a car? Who has a comparative advantage in washing cars?
What is each man's opportunity cost of washing a car? Who has a comparative advantage in washing cars?
Ted can wax 4 cars per day or wash 12 cars. Tom can wax 3 cars per day or wash
What factors have helped the United States to become the world's leading exporter of movies, books and popular music?
Why does saying that people are poor because they do not specialise make more sense than saying that people perform their own services because they are poor?
How will technological innovations that boost labour productivity affect an economy's PPF?
How will a reduction in the number of hours worked each day affect an economy's PPF?
Explain what 'having a comparative advantage' in producing a particular good or service means. What does 'having an absolute advantage' in producing a good or service mean?
The meal plan at university A lets students eat as much as they like for a fixed fee of 500 per semester. The average student there eats 250 kg of food per semester. University B charges 500 for a book of meal tickets that entitles the student to eat 250 kg of food per semester. If the student eats
For each long-distance call anywhere in the continental United States, a new phone service will charge users 30 cents per minute for the first 2 minutes and 2 cents per minute for additional minutes in each call. Tom's current phone ser- vice charges 10 cents per minute for all calls, and his calls
You and your friend Joe have identical tastes. At 2 pm, you go to the local Ticketmaster outlet and buy a 30 ticket to a football match to be played that night 50 km away. Joe plans to attend the same game, but because he cannot get to the Ticketmaster outlet, he plans to buy his ticket at the
Martha and Sarah have the same preferences and incomes. Just as Martha arrived at the theatre to see a play, she discovered that she had lost the 10 ticket she had pur- chased earlier. Sarah had also just arrived at the theatre planning to buy a ticket to see the same play when she discovered that
Suppose that in the last few seconds you devoted to Question 1 in your physics exam you earned 4 extra points, while in the last few seconds you devoted to Question 2 you earned 10 extra points. You earned a total of 48 and 12 points, respectively, on the two questions, and the total time you spent
Tom is a mushroom farmer. He invests all his spare cash in additional mushrooms, which grow on otherwise useless land behind his barn. The mushrooms double in weight during their first year, after which time they are harvested and sold at a constant price per kilogram. Tom's friend Dick asks Tom

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Principles Of Economics 3rd Edition Moore Mcdowell - Solutions

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