Q1. Suppose the short run market demand and supply curves for imported rice in the Pacific islands are as follows. The price are in dollars per kg and the quantities are kilograms per day: P=16-0.5Qd and P = 2 + 0.2Qs
a) Find the equilibrium price and quantity.
b) Plot the demand and supply curve and calculate the producer and consumer surplus(lable your diagram)
c) Calculate the price elasticity of the demand and supply
d) If a tax of $2 is imposed on the producers,state the new demand curve equation and the new equilibrium.
e) Re-draw the graph in (b) showing and calculating the government revenue from the tax and the dead weight loss.
f) What fraction or proportion of tax is paid by consumers and producers?
Q2. How does the Production possibilities frontier illustrate production efficiency?
Q3. Consider a single price monopoly that faces a market demand curve for a good is given by the equation P=100 - .1Q and the total cost function is given as TC = 1000 + 20Q + .4Q2
a) What is the total fixed cost for this monopoly?
b) Given that the firm is a single price monopoly, find the firm's profit maximizing quantity and price.
c) Calculate the consumer surplus and deadweight loss.
d) Find the competitive price and quantity(as if the above marginal cost curve represents the market supply curve.
e) Plot a graph on which you illustrate the monopoly's profit maximizing quantity and price, the competitive profit maximizing quantity and price and deadweight loss due to monopoly.
f) Calculate the profit of this single price monopoly.
g) Calculate the profit if it is a competitive firm.
h) Considering if this is a monopolistic firm, calculate the access capacity.