Brickley self tests , chapter 2 and 3
2-3. You have won a free ticket to see an Eric Clapton concert (which has no resale value). Bob Dylan is performing on the same night and is your next best alternative activity. Tickets to see Dylan cost $40. On any given day, you would be willing to pay up to $50 to see Dylan. Assume there are no other costs of seeing either performance. Based on this information, what is the opportunity cost of seeing Eric Clapton? a)
Ticket to see Dylan $40
Expected price to see Dylan: $50
Expected – real = $50 - $40 = $10
The opportunity cost to see Clapton is $10, which means Clapton performance would have to be better and much more worth than Dylan by $10. 3-2.
Suppose Sugar has the demand curve P= 50-5Q and the supply curve P=5Q. Compute the equilibrium price and quantity and show graphically. Calculate the consumer surplus and producer surplus associated with this outcome. b)
What factors might cause the equilibrium price and quantity of sugar to change? Pd= 50-5Q
Pd = Ps ; 50-5Q = 5Q
50 / 10 = Q ; Q = 5
Obtain the equilibrium price, substitute in Pd equation;
Pd = 50 – 5Q
Pd = 50 – 5 (5)
Pd = 50 – 25
Pd = 25 , our equilibrium price.
At a quantity of 5, the equilibrium price is $25. To know the excess for consumer and producer in our graphic, we can see the area of the curve below the equilibrium point, ½ (base x height) which in other words is: ½ (5 [Q] x 25 [P]) = 62.5 . The excess has a value of $62.5
Factors affecting demand: price of substitute incomes, an increase in the number of consumers will cause a movement to the right, meaning that by each price level we will have a major demand of sugar. On the other side, when the supply is affected by technology, production costs, price of incomes then the supply is decreased as well as the demand but the price will increase.
Capítulo 2 – página 21
$300 x año (52 semanas)...
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