Economic: Supply and Demand and Cost
Chapter 5 Question 1 The table gives the supply schedules for jet-ski rides by three owners: Rick, Sam, and Tom, the only suppliers of jet-ski rides. Price (dollars per ride) | Quantity supplied (rides per week) | | Rick | Sam | Tom | 10.00 | 0 | 0 | 0 | 12.50 | 5 | 0 | 0 | 15.00 | 10 | 5 | 0 | 17.50 | 15 | 10 | 5 | 20.00 | 20 | 15 | 10 | a. What is each owner’s minimum supply-price of 10 rides a day? At the minimum supply price of $15, Rick determines to supply 10 rides a day
b. Which owner has the largest producer surplus when the price of a ride is $17.50? Explain.
Rick is the largest producer surplus from rides when the price is $17.50 a ride. At this price he sells 15 rides a day because the 15th ride costs him $17.50 to produce but Rick is willing to produce the 10th ride for its marginal cost, which is $15, so Rick’s producer surplus on this ride is $5.
L ook at below the each producer surplus of each producer:
Rick’s producer surplus = (base x height)/2 = (15 x 7.5)/2 = $56.25
Sam’s producer surplus = (base x height)/2 = (10 x 5.0)/2 = $25.00
Tom’s producer surplus = (base x height)/2 = (5 x 2.5)/2 = $6.25
c. What is the marginal social cost of producing 45 rides a day?
At the price of $20, three suppliers are willing to produce total of 45 rides per day to market. Therefore, the market social cost is $20
d. Construct the market supply schedule of jet-ski rides. Price (dollars per ride) | Quantity supplied (rides per week) | Total of rides market supplied | | Rick | Sam | Tom | | 10 | 0 | 0 | 0 | 0 | 12.5 | 5 | 0 | 0 | 5 | 15 | 10 | 5 | 0 | 15 | 17.5 | 15 | 10 | 5 | 30 | 20 | 20 | 15 | 10 | 45 |
Chapter 6 Question 2 Chinese power plants have run short of coal, an unintended effect of government-mandated price controls — a throwback to communist central planning ----- to shield the public from rising global energy costs. … Beijing has also frozen retail prices of gasoline and diesel. … Oil refiners say they are suffering heavy
b. Which owner has the largest producer surplus when the price of a ride is $17.50? Explain.
Rick is the largest producer surplus from rides when the price is $17.50 a ride. At this price he sells 15 rides a day because the 15th ride costs him $17.50 to produce but Rick is willing to produce the 10th ride for its marginal cost, which is $15, so Rick’s producer surplus on this ride is $5.
L ook at below the each producer surplus of each producer:
Rick’s producer surplus = (base x height)/2 = (15 x 7.5)/2 = $56.25
Sam’s producer surplus = (base x height)/2 = (10 x 5.0)/2 = $25.00
Tom’s producer surplus = (base x height)/2 = (5 x 2.5)/2 = $6.25
c. What is the marginal social cost of producing 45 rides a day?
At the price of $20, three suppliers are willing to produce total of 45 rides per day to market. Therefore, the market social cost is $20
d. Construct the market supply schedule of jet-ski rides. Price (dollars per ride) | Quantity supplied (rides per week) | Total of rides market supplied | | Rick | Sam | Tom | | 10 | 0 | 0 | 0 | 0 | 12.5 | 5 | 0 | 0 | 5 | 15 | 10 | 5 | 0 | 15 | 17.5 | 15 | 10 | 5 | 30 | 20 | 20 | 15 | 10 | 45 |
Chapter 6 Question 2 Chinese power plants have run short of coal, an unintended effect of government-mandated price controls — a throwback to communist central planning ----- to shield the public from rising global energy costs. … Beijing has also frozen retail prices of gasoline and diesel. … Oil refiners say they are suffering heavy