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Part 1 Consumers are willing to pay $1300 for 2000th computer in a small town; and they are willing to pay only $700 for the 8000th computer. Find the Equation for Demand. Show how you find the

Part 1

  1. Consumers are willing to pay $1300 for 2000th computer in a small town; and they are willing to pay only $700 for the 8000th computer.

Find the Equation for Demand.  Show how you find the slope and the intercept.

  1. Computer Producers are observed to change quantity they supply under the condition that the Price of each Input is $100

                                   

Supply            Inputs            MC(?)

1000                  2               _____

2000                  5               _____

3000                  9               _____

 

Fill in the Marginal Cost and Equation of the Supply Curve.  Show how you find slope and intercept.

  1. What is the Equilibrium Price and Quantity?  Show how you set it up.

         3a.   Draw a Graph of both lines. Label the intercepts and Equilibrium point on the graph as Cartesian coordinates (label the points)

 

 

 

 

 

  1. What is Consumer Surplus (measure and show on graph as CS)? Show work.
  1. What is Producer Surplus (measure and show on graph as PS)?  Show your work (Careful about the intercept)

 

 

  1. What is Total Variable Cost (measure and show on graph as TVC)?  Also note supply intercept.
  1. What is the total willingness to pay for the equilibrium quantity.  

 

Part 2

  1. Everything above stays exactly the same (the demand curve and the price of inputs) except for technology which lowers the input requirements to:

 

Supply            Inputs            MC(?)

1000                  1               _____

2000                 2.5             _____

  1.                  4.5             _____

 

  1. What is the NEW Supply Curve?
  2. What is the NEW Equilibrium?
  3. What is the NEW Producer Surplus (show increase on graph as PS Gain)?
  4.   Find the Price Elasticity of demand starting from the original to the final market outcomes.
  5. If you were the one who introduced the technological change and bought 10 firms (forward leverage) before it happened, how much would you make the first year’s rent?

   

Apr 12 2021 View more View Less

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