Assignment:
The question has multiple portions and each piece builds on the next section. Be prepared to answer this information as you proceed to the next portion. SHOW ALL YOUR WORK! GRAPHS, FORMULAS, MATH, EVERYTHING!
1.) You are given the following supply and demand curve functions for a market for sunglasses.
Graph the following:
- The demand curve;
- The supply curve;
- Consumer surplus;
- Producer surplus;
- Total surplus;
- The equilibrium price and quantity; and,
- Total revenue for this market.
Using the functions above, the following table is found. Please complete this table.
|
Price
|
Quantity Sold
|
Quantity Produced
|
Total Revenue
|
Fixed Cost
|
Variable Cost
|
Total Cost
|
Marginal Cost
|
Average Total Cost
|
Average Fixed Cost
|
Average Variable Cost
|
Profit
|
Marginal Revenue
|
|
$0
|
340
|
0
|
$0
|
$150
|
$0
|
|
-
|
-
|
-
|
-
|
-
|
-
|
|
$40
|
260
|
50
|
|
|
|
$290
|
|
|
|
$2.80
|
$10,110
|
-$130
|
|
$50
|
240
|
100
|
$12,000
|
$150
|
|
$310
|
$0.40
|
$3.10
|
$1.50
|
$1.60
|
|
|
|
$60
|
220
|
150
|
|
|
$210
|
$360
|
$1.00
|
|
|
|
$12,840
|
|
|
$70
|
|
|
$14,000
|
$150
|
|
$480
|
|
$2.40
|
$0.75
|
|
|
-$40
|
|
$100
|
140
|
350
|
|
$150
|
$710
|
|
$2.53
|
|
|
$2.03
|
|
$0
|
|
$120
|
100
|
450
|
|
|
$970
|
$1,120
|
|
$2.49
|
$0.33
|
|
$10,880
|
|
Please graph the following using the previous table:
- Marginal cost;
- Average total cost;
- Average fixed cost;
- Marginal revenue; and,
- Average variable cost.
2.) If a price ceiling of $100 is imposed, what will happen within this market? Please graph the results and explain.
3.) Suppose a consumer report comes out stating that sunglasses will decrease the risk of cataracts by 20 percent if worn during peak sun hours regularly. What may happen in the market for sunglasses? Please draw and explain the change in the graph. Using the previous table, select a new price and quantity supplied. You know Qs = Qd at equilibrium, so if you are looking for:
Graph the following:
- The original supply curve;
- The original demand curve;
- The original price at equilibrium;
- The original quantity at equilibrium;
- The new demand curve;
- The new price at equilibrium;
- The new quantity at equilibrium;
- The original consumer surplus;
- The new consumer surplus;
- The original producer surplus;
- The new producer surplus;
- The original total surplus;
- The new total surplus.
What is the change in total revenue under the new demand?
4.) What happens if a $7 tax is imposed on sunglasses, find the equation for . Solve for the following items:
- The price buyer's pay under the tax;
- The quantity buyers will purchase at the price under the tax;
- The price seller's receive under the tax for that quantity;
- The new producer surplus under tax;
- The new consumer surplus under tax;
- The new tax revenue received;
- The new total surplus under tax; and,
- The deadweight loss.
Use the new demand function found in Question 3 to solve as your Qd function. Please be sure to graph everything as well.