Microeconomics 8th edition Jeffrey M. Perloff - Solutions

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What are the two main antitrust laws and when were they enacted?
What are the common features of all games?
Why do firms in oligopoly face a temptation to collude?
Why are firms in oligopoly interdependent?
The HHI for automobiles is 2,350, for sporting goods it is 161, for batteries it is 2,883, and for jewelry it is 81. Which of these markets is an example of monopolistic competition?
The four-firm concentration ratio for audio equipment makers is 30 and for electric lamp makers it is 89. The HHI for audio equipment makers is 415 and for electric lamp makers is 2,850. Which of these markets is an example of monopolistic competition?
Provide some examples of industries near your school that operate in monopolistic competition.
A California jury found Samsung guilty of violating the majority of the patents in question, including software features like double-tap zooming and scrolling. It recommended that Apple be awarded more than $1 billion in damages. This verdict could significantly affect both smartphone users and
The U.S. Postal Service has a monopoly on non-urgent First Class Mail. Pfizer Inc. makes LIPITOR, a prescription drug that lowers cholesterol. Cox Communications is the sole provider of cable television service in some parts of San Diego. Are any of these firms protected by a barrier to entry? Do
What is the relationship between price, marginal revenue, and marginal cost when a single-price monopoly is maximizing profit?
What is the relationship between marginal cost and marginal revenue when a single-price monopoly maximizes profit?
How does monopoly arise?
GM will temporarily lay off 1,300 employees as the company stops production of the electric car, Chevy Volt, for five weeks. GM had hoped to sell 10,000 Volts last year, but ended up selling just 7,671. It plans to maintain inventory levels by adjusting production to match demand. a. Explain
Executive compensation, based on performance, can theoretically constrain pay, but companies are paying their top executives more and more. The median compensation of a CEO in 2013 was $13.9 million, up 9 percent from 2012. What is the economic problem that CEO compensation schemes are
What are the two ways in which economic activity can be coordinated?
Under what conditions do the measures of concentration give a good indication of the degree of competition in a market?
What is a firm’s fundamental goal and what happens if the firm doesn’t pursue this goal?
Sara’s income is $12 a week. The price of popcorn rises from $3 to $6 a bag, and the price of a smoothie is unchanged at $3. Explain how Sara’s budget line changes with smoothies on the x-axis.
If the price of a normal good falls, what happens to the quantity demanded of that good?
When a consumer chooses the combination of goods and services to buy, what is she or he trying to achieve?
What does a household’s budget line show?
Add two columns to your table in Problem 6 and list Max’s marginal utility per dollar from windsurfing and from snorkeling.Hours per dayTotal utility from windsurfingTotal utility from snorkeling1120 402220 7633001064360128539614064121507422158Data From Problem 6Make a table of
Make a table of the combinations of hours spent windsurfing and snorkeling that Max can afford.Hours per dayTotal utility from windsurfingTotal utility from snorkeling1120 402220 7633001064360128539614064121507422158
Which does Max enjoy more: his 6th hour of windsurfing or his 6th hour of snorkeling? Hours per dayTotal utility from windsurfingTotal utility from snorkeling1120 402220 7633001064360128539614064121507422158
Calculate Max’s marginal utility from snorkeling at each number of hours per day. Does Max’s marginal utility from snorkeling obey the principle of diminishing marginal utility? Hours per dayTotal utility from windsurfingTotal utility from
Calculate Max’s marginal utility from windsurfing at each number of hours per day. Does Max’s marginal utility from windsurfing obey the principle of diminishing marginal utility?
a. What is the TPP?b. Who in the United States would benefit and who would lose from a successful TPP?c. Illustrate your answer to part (b) with an appropriate graphical analysis assuming that tariffs are not completely eliminated.d. Who in Japan and other TPP nations would benefit and who would
Explain who in the United States gains from the quota on beef imports and who loses.
Suppose that in 2015 tomato growers in Florida lobby the U.S. government to impose an import quota on Mexican tomatoes. Explain who in the United States would gain and who would lose from such a quota.
Explain the effects of an import quota on domestic production, consumption, and price.
Explain the effects of a tariff on domestic production, the quantity bought, and the price.
How is the gain from exports distributed between consumers and domestic producers?
How is the gain from imports distributed between consumers and domestic producers?
a. When a state raises its minimum wage above the federal minimum, what would you expect to happen to unemployment in that state? Illustrate your answer with a graph.b. The news article reports that the percentage of hourly paid workers paid the minimum wage or less decreased from 13.4 percent in
If the government subsidizes growers at $4 a pound, who gains and who loses from the subsidy? What is the deadweight loss? Could the subsidy be regarded as being fair?
If the government subsidizes growers at $4 a pound, what is the quantity produced, the quantity demanded, and the subsidy paid to growers? FIGURE 6.6 12 10 8 4 1 3 4 Quantity (billions of pounds per year) Price (dollars per pound) 2.
If the college put a price ceiling on meals at $4 a meal, what is the quantity bought, the shortage of meals, and the maximum price that someone is willing to pay for the last meal available?
The table sets out the demand and supply schedules for college meals.a. What are the equilibrium meal price and equilibrium quantity of meals? b. If the college put a price ceiling on meals at $7 a meal, what is the price students pay for a meal? How many meals do they buy? Quantity supplied
Calculate the equilibrium wage rate, the hours worked, and the quantity of unemployment. Quantity Quantity supplied (hours per month) Wage rate (dollars per hour) demanded 2,500 5 1,500 2,000 2,000 1,500 2,500 3,000 8 1,000
If there’s one thing that can set home heating costs soaring, it’s a long, frigid blast from one of the coldest winters in 20 years and people are going to use 10 to 12 per cent more natural gas this year than they have normally. a. How is the price of natural gas determined? b. When
What is each owner’s minimum supply-price of 10 rides a day? Price Quantity supplied (rides per week) (dollars Rick Sam Tom per ride) 10.00 12.50 15.00 10 5 15 17.50 10 10 20.00 20 15
Under the deal, Netflix will buy Internet service from Comcast, rather than connect directly for free with some smaller ISPs like Cablevision as it does now. a. How will Netflix’s decision to buy more expensive Internet service influence Netflix’s supply of online movie viewing? b.
a. Looking at Fig. 1 on p. 99, explain what must have happened in 2014 to the supply of coffee.b. Given the information in Fig. 1 and the estimated elasticity of demand for coffee, by what percentage did the quantity of coffee change in 2014 and in which direction?c. The news article says that
Given the prices of the two holidays, is the income elasticity of demand for exotic holidays positive or negative? Are exotic holidays a normal good or an inferior good? Are local holidays a normal good or an inferior good?
a. What would happen to the price of bananas if TR4 spread to Central America?b. What are some of the substitutes for bananas and what would happen to demand, supply, price, and quantity in the markets for these items if TR4 were to come to America?c. What are some of the complements of bananas and
With the new way to tap maple trees, farmers could produce 10 times as much maple syrup per acre.Will the new method change the supply of maple syrup or the quantity supplied of maple syrup, other things remaining the same. Explain.
When a timber mill makes logs from trees it also produces sawdust, which is used to make plywood.a. Explain how a rise in the price of sawdust influences the supply of logs.b. Explain how a rise in the price of sawdust influences the supply of plywood.
In 2013, the price of corn fell and some corn farmers will switch from growing corn in 2014 to growing soybeans.a. Does this fact illustrate the law of demand or the law of supply? Explain your answer.b. Why would a corn farmer grow soybeans?
As the average income in China continues to increase, explain how the following would change:a. The demand for beefb. The demand for rice
Which of the following goods are likely substitutes and which are likely complements? (You may use an item in more than once.): coal, oil, natural gas, wheat, corn, pasta, pizza, sausage, skateboard, roller blades, video game, laptop, iPad, cellphone, text message, email
In April 2014, the money price of a carton of milk was $2.01 and the money price of gallon of gasoline was $3.63. Calculate the relative price of a gallon of gasoline in terms of milk.
a. How has “fracking” changed U.S. production possibilities? b. How have advances in technologies for producing other goods and services changed the U.S. production possibilities?c. If “fracking” had been the only technological advance, how would the PPF have changed? d. If
How do we graph a relationship among more than two variables?
Which of the following statements is positive, which is normative, and which can be tested?a. The United States should cut its imports.b. China is the largest trading partner of the United States.c. If the price of antiretroviral drugs increases, HIV/AIDS sufferers will decrease their consumption
The health insurance reform signed into law by President Obama in 2010 included the following two provisions: i. Insurance companies must offer health insurance to everyone who applies and charge them the same price regardless of a person’s preexisting health condition.ii. Everyone must buy
Explain why majority rule respects the preferences of the median voter rather than the average voter.
What unusual property of voting did Condorcet notice?
Five consumers have the following marginal utility of apples and pears:The price of an apple is $1, and the price of a pear is $2. Which, if any, of these consumers are optimizing over their choice of fruit? For those who are not, how should they change their spending? Marginal Utility of Apples
Carlos consumes only cheese and crackers.a. Could cheese and crackers both be inferior goods for Carlos? Explain.b. Suppose that cheese is a normal good for Carlos while crackers are an inferior good. If the price of cheese falls, what happens to Carlos’s consumption of crackers? What happens to
The poverty rate would be substantially lower if the market value of in-kind transfers were added to family income. The largest in-kind transfer is Medicaid, the government health program for the poor. Let’s say the program costs $10,000 per recipient family.a. If the government gave each
Table 3 shows that the percentage of children in families with income below the poverty line far exceeds the percentage of the elderly in such families. How might the allocation of government money across different social programs have contributed to this phenomenon?
What has happened to the income share of the richest fifth of the U.S. population over the past 40 years?
Does the richest fifth of the U.S. population earn closer to three, six, or twelve times the income of the poorest fifth?
How might education raise a worker’s wage without raising the worker’s productivity?
In what sense is education a type of capital?
Classify the following markets as perfectly competitive, monopolistic, or monopolistically competitive, and explain your answers.a. Wooden no. 2 pencilsb. Copperc. Local electricity serviced. Peanut buttere. Lipstick
What gives the government the power to regulate mergers between firms? Give a good reason and a bad reason (from the perspective of society’s welfare) that two firms might want to merge.
An industry currently has 100 firms, each of which has fixed cost of $16 and average variable cost as follows:Quantity Average Variable Cost1.................... $12 ....................
What is the marginal tax rate on a lump-sum tax?How is this related to the efficiency of the tax?
Over the past century, has the government’s tax revenue grown more or less slowly than the rest of the economy?
There are three industrial firms in Happy Valley.The government wants to reduce pollution to 60 units, so it gives each firm 20 tradable pollution permits.a. Who sells permits and how many do they sell? Who buys permits and how many do they buy? Briefly explain why the sellers and buyers are
Suppose that your demand schedule for pizza is as follows:a. Use the midpoint method to calculate your price elasticity of demand as the price of pizza increases from $8 to $10 if (i) your income is $20,000 and (ii) your income is $24,000.b. Calculate your income elasticity of demand as your income
Draw a circular-flow diagram. Identify the parts of the model that correspond to the flow of goods and services and the flow of dollars for each of the following activities.a. Selena pays a storekeeper $1 for a quart of milk.b. Stuart earns $8 per hour working at a fast-food restaurant.c. Shanna
What is the effect of a subsidy of s per hour on labor in only one sector of the economy on the equilibrium wage, total employment, and employment in the covered and uncovered sectors?
As discussed in the previous question, Lewis Wolff and his investment group bought the Oakland A’s baseball team for $180 million in 2005. Reportedly, Hall-of-Famer Reggie Jackson offered $25 million more but was rebuffed (Forbes, 2005). How would the calculations in Solved Problem 16.3 change if
Discussing the $350 price of a ticket for one of her concerts, Barbra Streisand said, “If you amortize the money over 28 years, it’s $12.50 a year. So is it worth $12.50 a year to see me sing? To hear me sing live?” Under what condition is it useful for an individual to apply Ms.
The website http://www.timetravelfund.com discusses investing $1 at 5% interest, which it says will be worth $39,323,261,827.22 in 500 years. Is its calculation correct, and, if so, for what frequency of compounding? If you wish, you may also discuss how good an investment you think this site
Show that advertising is a dominant strategy for both firms in both panels of Table 14.4. Explain why that set of strategies is a Nash equilibrium.Table 14.4 Firm 1 Do Not Enter Enter Do Not Enter Firm 2 -1 Enter -1
Electric power is often generated by burning oil or gas to create steam. That steam is used to drive the turbines and produce electricity. One barrel of crude oil produces about 5.6 million BTUs of energy, while 1,000 cubic feet of natural gas produces 1,027,000 BTUs
Algebraically solve for the after-tax equilibrium price and quantity in the corn market if the government collects a specific tax of t = $2.40 from customers, as panel b of Figure 3.6 illustrates.
Find the percentage change in price in each of the following examples using the mid-point method.a. The price of a $4.50 sandwich increases to $5.50.b. The sale discounts the price of a sofa from $750 to $500.
Create four quadrants using x- and y-axes. Use your graph to plot the following points.a. (0,4)b. (0, -2)c. (1,0)d. (-3, 0)
Create four quadrants using x- and y-axes. Use your graph to plot the following points.a. (1, 4)b. (–2, 1)c. (–3, –3)d. (3, –2)
Suppose you want to buy your significant other tickets to see his or her favorite musical on Broadway in New York City, but you have never purchased tickets to a Broadway musical before and don't know how much they cost. What would be a good "anchor" to use in your estimate?a. The cost of movie
When it comes to making decisions, which of the following statements are true? Select all that apply.a. Individuals will make the same choices no matter how information is presented.b. Anchoring is always helpful when making decisions.c. Anchoring can mislead individuals into making suboptimal
Figure 13P-2 shows the marginal cost curve for a firm in a competitive market. The market price is $24. Plot this firm's profit-maximizing price and quantity.
Select all that apply. In a perfectly competitive market, MR equals:a. Priceb. Average revenuec. Total revenued. Δ in total revenue / Δ in quantity
In the United States, public schools are often funded by property taxes levied on the property in surrounding areas. Which of the following statements explains how this can result in a poverty trap? Select all that apply.a. Individuals must buy a higher-priced home in order to attend a school that
For each of the scenarios below, determine whether you think it is likely that an employer could be discriminating against a person because of his or her age. Explain why or why not.
A Chinese high technology manufacturing firm has a production function of q = 10L0.28K0.64 (based on Zhang et al., 2012). It faces factor prices of w = 10 and r = 20. What are its short-run marginal cost and average variable cost curves?
If the cost function for John’s Shoe Repair is C(q) = 100 + 10q - q2 + 1/3q3, and its marginal cost function is MC = 10 - 2q + q2, what is its profit-maximizing condition given that the market price is p?
The demand curve Q = A/p, where A is a positive constant, has the property that the elasticity of demand is ε = -1. If a monopoly faces this demand curve, where would it set its price or quantity if it has a positive marginal cost? Explain. Is this situation plausible?
If the inverse market demand function facing a duopoly is p = a - bQ, what are the Nash- Cournot equilibrium quantities if the marginal cost of Firm 1 is m and that of Firm 2 is m + x, where x > 0? Which firm produces more and which has the higher profit?
In 2012, the U.S. government sued to block the world’s biggest beer maker, Anheuser-Busch InBev, from buying Mexico’s Grupo Modelo (which manufactures Corona and other beers) for $20 billion (Brent Kendall and Valerie Bauerlein, “U.S. Sues to Block Big Beer Merger,” Wall Street Journal,
Show how the Nash-Cournot equilibrium for n firms given in Appendix 13A changes if each firm faces a fixed cost of F as well as a constant marginal cost per unit.
In 2016, Tesla introduced a new version of its popular Model S electric sedan, the S 60, starting at $66,000. It comes with a battery pack that can store 75 kilowatt-hours of electricity, but its software limits it to using only 60. However, for $9,000, the owners can get a simple software upgrade
College students could once buy a computer at a substantial discount through a campus buying program.The discounts largely disappeared in the late 1990s, when PC companies dropped their prices. “The industry’s margins just got too thin to allow for those [college discounts],” said the
Various services such as Hulu.com that provide television shows and movies over the Internet subject customers to customized commercials, as the firms learn more about their customers’ viewing habits. How does this customization affect the marginal benefit curve for an advertiser, and why?
The Cobb-Douglas production function for a U.S. tobacco products firm is q = L0.2K0.3 (see the Application “Returns to Scale in Various Industries” in Chapter 6). Derive the marginal revenue product of labor for this firm.
If a monopoly has a Cobb-Douglas production function, Q = LaKb, and faces an inverse demand function of p = Q-d, what is its marginal revenue product of labor?

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Microeconomics 8th edition Jeffrey M. Perloff - Solutions

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