Problem Set Seven Solutions
Chapter 9 1. Two car manufacturers, Saab and Volvo, have fixed costs of $1 billion and constant marginal costs of $10,000 per car. If Saab produces 50,000 cars per year and Volvo produces 200,000, calculate the average fixed cost and average total cost for each company. On the basis of these costs, which company’s market share should grow in relative terms? Answer: Average total cost is average fixed cost plus marginal cost: ATC = FC/Q + MC. Volvo’s average fixed cost $1 billion/200,000 = 5,000 is much less than Saab’s average fixed cost $1 billion/50,000 = 20,000 due to producing more cars. Volvo’s average production cost $15,000 is lower than Saab’s of $30,000 by the difference in average fixed costs. Volvo’s market share should grow relative to Saab’s.

6. What is the socially desirable price for a natural monopoly to charge? Why will a natural monopoly that attempts to charge the socially optimal price invariably suffer an economic loss? Answer: The socially desirable price to charge is the one at which the marginal benefit to consumers equals the marginal cost of production. However, natural monopolies usually have very large fixed costs and relatively low marginal costs. The high fixed costs mean that average cost is greater than marginal cost, so that charging a price equal to marginal cost implies economic losses.

8. Suppose that Aggieland Cinema is a local monopoly whose demand curve for regular adult tickets on Saturday night is P = 12 - 2Q, where P is the price of a ticket in dollars and Q is the number of tickets sold in hundreds. The demand for student tickets on Sunday afternoon is P = 8 - 3Q, and for regular adult tickets on Sunday afternoon, P = 10 - 4Q. On both Saturday night and Sunday afternoon, the marginal cost of an additional patron, student or not, is $2. a. What is the marginal revenue curve in each of the three markets? Answer: The marginal revenue curves are MR = 12 - 4Q adult Saturday night, MR = 8 -...

...ECON112 Macroeconomics ProblemSet 3 *Solution* Fall 2010 (Instructor: Li, Yao; TA: Fok Pik Lin, Astor)
-----------------------------------------------------------------------------------------------------------------------------------Posted: Monday, November 1, 2010 Due: 5:30 PM Monday, November 8, 2010 40 marks total
Part I: True/False/Uncertain Please justify your answer with a short argument for each question and
draw a diagram if necessary....

...SOLUTIONS
Financial Management
Seminar + Homework, Week 5
1. Starware Software was founded last year to develop software for gaming applications. Initially, the founder invested $800,000 and received 8 million shares of stock. Starware now needs to raise a second round of capital, and it has identified an interested venture capitalist. This venture capitalist will invest $1 million and wants to own 20% of the company after the investment is completed.
a. How many shares must...

...Department of Economics University of California, Berkeley
Fall 2012 Econ 182
SolutionsProblemSet 8
Problem 1. Exchange Rates and International Transmission a. Suppose that the US engages in a monetary expansion. Since exchange rate is pegged to the US dollar, country X’s monetary authorities are forced to expand their money supply as well (recall that i = i* under FixER). Interest rates fall in country X, output expands, and of...

...Me1
ProblemSet #2
The US College Enrollment and the “Third Law of Demand”
A theorem proposed by Professors Alchian and Allen in their text, University Economics (1964) has had several rebirths of interest in the literature. The so-called “third law of demand,” or “relative price theorem,” holds that a fixed cost added to a good of varying quality causes the consumer to prefer the category considered of higher quality to the lower.
Recently a number of...

...Feenstra and Taylor, “International Trade”, 2nd Edition. We follow the textbook very closely in class and cover about 70% of its contents.
2. Yeaple, Study Guide for Feenstra and Taylor’s International Trade, 2nd Edition. We take many practice problems from the Study Guide.
5 copies of the textbook (2nd edition) and 5 copies of the Study Guide (2nd edition) are on reserve at Parrish (the management-and-econ library).
Distribution of homework and other materials:...

...EC 109
Autumn 2011
Dr. Mani
ProblemSet 2
Due Date: Oct31, Monday – between 9 & 11 AM in room S 2.132
Please keep a copy of your assignment and show all your work clearly.
(1) Mr. J. Bond, a retired movie actor, consumes only grapes and the composite good Y (i.e. price of Y is £1). His income consists of £10000 a year from his investment fund plus the proceeds of whatever he sells of...

...J
Solution:
m = 2200 J / (9.8 m/s2 x 5 m)
m = 49 kg
2. Calculate the kinetic energy of a 500 kg car travelling at 50 m/s.
Given: Formula:
m = 500 kg KE = mv2/2
v = 50 m/s
Solution:
KE = 500 kg x (50 m/s)2 / 2
KE = 625 000 J
Power
3. Riley climbs a flight of stairs in 3 minutes. If he weighs 700 N and the stairs is 20 m from the ground, how much power will she develop?
Given: Formula:
t = 3 mins = 180 s P = Wd/t
W =...

...GENERAL BIOCHEMISTRY
ProblemSet No. 1
Answered by: Andrea Rose A. Fajardo of BSFT 2-1N
1. Calculate the pH of a dilute solution that contains a molar ratio of potassium acetate to acetic acid (pKa=4.76) of:
a. 2:1
pH = 4.76 + log[2]/[1]
= 4.76 + 0.3010
= 5.06
b. 1:4
pH = 4.76 + log[1]/[4]
= 4.76 + (-0.6021)
= 4.16
c. 6:5
pH = 4.76 +...

525 Words |
4 Pages

Share this Document

{"hostname":"studymode.com","essaysImgCdnUrl":"\/\/images-study.netdna-ssl.com\/pi\/","useDefaultThumbs":true,"defaultThumbImgs":["\/\/stm-study.netdna-ssl.com\/stm\/images\/placeholders\/default_paper_1.png","\/\/stm-study.netdna-ssl.com\/stm\/images\/placeholders\/default_paper_2.png","\/\/stm-study.netdna-ssl.com\/stm\/images\/placeholders\/default_paper_3.png","\/\/stm-study.netdna-ssl.com\/stm\/images\/placeholders\/default_paper_4.png","\/\/stm-study.netdna-ssl.com\/stm\/images\/placeholders\/default_paper_5.png"],"thumb_default_size":"160x220","thumb_ac_size":"80x110","isPayOrJoin":false,"essayUpload":false,"site_id":1,"autoComplete":false,"isPremiumCountry":false,"userCountryCode":"CN","logPixelPath":"\/\/www.smhpix.com\/pixel.gif","tracking_url":"\/\/www.smhpix.com\/pixel.gif","cookies":{"unlimitedBanner":"off"},"essay":{"essayId":37954981,"categoryName":null,"categoryParentId":null,"currentPage":1,"format":"text","pageMeta":{"text":{"startPage":1,"endPage":3,"pageRange":"1-3","totalPages":3}},"access":"premium","title":"Problem Set Seven Solutions","additionalIds":[],"additional":[],"loadedPages":{"html":[],"text":[1,2,3]}},"user":null,"canonicalUrl":"http:\/\/www.studymode.com\/essays\/Problem-Set-Seven-Solutions-1722029.html","pagesPerLoad":50,"userType":"member_guest","ct":10,"ndocs":"1,500,000","pdocs":"6,000","cc":"10_PERCENT_1MO_AND_6MO","signUpUrl":"https:\/\/www.studymode.com\/signup\/","joinUrl":"https:\/\/www.studymode.com\/join","payPlanUrl":"\/checkout\/pay","upgradeUrl":"\/checkout\/upgrade","freeTrialUrl":"https:\/\/www.studymode.com\/signup\/?redirectUrl=https%3A%2F%2Fwww.studymode.com%2Fcheckout%2Fpay%2Ffree-trial\u0026bypassPaymentPage=1","showModal":"get-access","showModalUrl":"https:\/\/www.studymode.com\/signup\/?redirectUrl=https%3A%2F%2Fwww.studymode.com%2Fjoin","joinFreeUrl":"\/essays\/?newuser=1","siteId":1,"facebook":{"clientId":"306058689489023","version":"v2.8","language":"en_US"},"analytics":{"googleId":"UA-32718321-1"}}