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Which type of market structure generates greater profits? Why? Give 5 Characteristics of a PC firm and monopoly. What are the implications of each of these characteristics? Give a real life example of a monopoly and a PC firm.
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In Assignment 2 you will be required to compare the optimal linear tax model we have discussed in class with a welfare sys ...
ECN 130 University of California Davis Optimal Income Taxation Problems
In Assignment 2 you will be required to compare the optimal linear tax model we have discussed in class with a welfare system which is comprised of a flat tax component and a means- tested transfer program.In the first part, you need to draw the budget curve faced by a typical consumer. You can either draw it in the c-l space or in the c-y space. You should do it in two steps. First draw the flat tax schedule (in the absence of the SSI program). Now modify the curve to incorporate the transfer program. Make sure the transfer applies only to individuals whose level of income falls below the specified threshold. You should get a kinked budget curve!In the second part, you need to calculate the MTR – an acronym for the marginal tax rate – for individuals who are eligible for an income supplement (caution!!! this is the effective marginal tax rate and not the statutory one, given by t). You can play with numbers to ensure you get the right answer. You need to demonstrate that the effective marginal tax rate is 100 percent! The easiest way to get it is to draw the budget line in the c-y space, then 1-dc/dy=MTR, thus you need to show that dc/dy=0 (what would a budget line with such a property in the relevant range look like?).To demonstrate the distortion on labor market participation choice, draw the indifference curve for the typical consumer (do it in the c-y space) and show that when the curve is steep enough (for a low ability worker) we get a corner solution, that is the worker prefers to stay out of the labor market and rely on government support only.In the third part, you need to formulate the government program. The government seeks to pay benefits only to the low ability worker. In light of the 100 percent MTR each worker has essentially two options: work and earn enough, so that eligibility for benefits is forgone, or do not work at all and rely on government support. The incentive constraints should ensure that the low skill guy will indeed choose not to work whereas the high skill guy will choose to work and will not receive benefits. You need to calculate the utility associated with each one of these two options faced by the worker and write two incentive (inequality) constraints for the high skill guy and for the low skill one, respectively. You also need to formulate the revenue constraint of the government which takes into account the choice of the two individuals (one is working and the other is receiving benefits).You can skip the next three (more technical) parts and just show that when both the revenue constraint and the incentive constraint of the high skill agent are binding (satisfied as equalities) then the optimal tax rate is t=1/3. You will basically solve a system of two equations for two unknowns.Now we get to the interesting part. Assume that the wage rate of the low skill guy is zero – so he possesses no market skills at all. Calculate the utility of the low skill guy in this case and compare it with the optimal solution of the linear tax we have solved in class (the government would set the tax at the Laffer rate in this case - make sure you have got it right). Show that the SSI program makes the poor guy better off relative to the linear system. Try to provide interpretation. Think of the targeting advantages of the SSI system and the costs associated with crowding out the low-skill guy from the labor market. Is this a real cost given our parametric assumptions? Can you generalize the conclusion to the case in which the low skill guy will have a positive wage rate?
Production Cost Analysis help
Production Cost Analysis and Estimation Applied Problems**** ALL
parts answered and labeled with original work ****plagi ...
Production Cost Analysis help
Production Cost Analysis and Estimation Applied Problems**** ALL
parts answered and labeled with original work ****plagiarism report
must be attached pls***Introduction and conclusion paragragh required along with references
Please complete the following two applied problems:
Problem 1:
William is the owner of a small pizza shop and is thinking of
increasing products and lowering costs. William’s pizza shop owns four
ovens and the cost of the four ovens is $1,000. Each worker is paid $500
per week.
Workers employed
Qty of pizzas produced per week
0
1
2
3
4
5
6
7
8
0
75
180
360
600
900
1140
1260
1360
Show all of your calculations and processes. Describe your
answer for each question in complete sentences, whenever it is
necessary.
Which inputs are fixed and which are variable in the
production function of William’s pizza shop? Over what ranges do there
appear to be increasing, constant, and/or diminishing returns to the
number of workers employed?What number of workers appears to be most efficient in terms of pizza product per worker?What number of workers appears to minimize the marginal
cost of pizza production assuming that each pizza worker is paid $500
per week?Why would marginal productivity decline when you hire more workers in the short run after a certain level?How would expanding the business affect the economies of
scale? When would you have constant returns to scale or diseconomies of
scale? Describe your answer.
Problem 2:
The Paradise Shoes Company has estimated its weekly TVC function
from data collected over the past several months, as TVC = 3450 + 20Q +
0.008Q2 where TVC represents the total variable cost and Q represents
pairs of shoes produced per week. And its demand equation is Q = 4100 –
25P. The company is currently producing 1,000 pairs of shoes weekly and
is considering expanding its output to 1,200 pairs of shoes weekly. To
do this, it will have to lease another shoe-making machine ($2,000 per
week fixed payment until the lease period ends).
Show all of your calculations and processes. Describe your
answer for each item below in complete sentences, whenever it is
necessary.
Describe and derive an expression for the marginal cost (MC) curve.Describe and estimate the incremental costs of the extra 200 pairs per week (from 1,000 pairs to 1,200 pairs of shoes).What are the profit-maximizing price and output levels
for Paradise Shoes? Describe and calculate the profit-maximizing price
and output.Discuss whether or not Paradise Shoes should expand its
output further beyond 1,200 pairs per week. State all assumptions and
qualifications that underlie your recommendation.
6 pages
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Most Popular Content
3 pages
Market For Medications
Patented medications are more inelastic. The implication of this is that they do not have substitutes and consumers will s ...
Market For Medications
Patented medications are more inelastic. The implication of this is that they do not have substitutes and consumers will still buy them regardless of ...
5 pages
Digital Currency
In these changing times, everything is evolving, even the nature of money is changing. Modes of payment are changing from ...
Digital Currency
In these changing times, everything is evolving, even the nature of money is changing. Modes of payment are changing from the conventional cash at ...
ECN 130 University of California Davis Optimal Income Taxation Problems
In Assignment 2 you will be required to compare the optimal linear tax model we have discussed in class with a welfare sys ...
ECN 130 University of California Davis Optimal Income Taxation Problems
In Assignment 2 you will be required to compare the optimal linear tax model we have discussed in class with a welfare system which is comprised of a flat tax component and a means- tested transfer program.In the first part, you need to draw the budget curve faced by a typical consumer. You can either draw it in the c-l space or in the c-y space. You should do it in two steps. First draw the flat tax schedule (in the absence of the SSI program). Now modify the curve to incorporate the transfer program. Make sure the transfer applies only to individuals whose level of income falls below the specified threshold. You should get a kinked budget curve!In the second part, you need to calculate the MTR – an acronym for the marginal tax rate – for individuals who are eligible for an income supplement (caution!!! this is the effective marginal tax rate and not the statutory one, given by t). You can play with numbers to ensure you get the right answer. You need to demonstrate that the effective marginal tax rate is 100 percent! The easiest way to get it is to draw the budget line in the c-y space, then 1-dc/dy=MTR, thus you need to show that dc/dy=0 (what would a budget line with such a property in the relevant range look like?).To demonstrate the distortion on labor market participation choice, draw the indifference curve for the typical consumer (do it in the c-y space) and show that when the curve is steep enough (for a low ability worker) we get a corner solution, that is the worker prefers to stay out of the labor market and rely on government support only.In the third part, you need to formulate the government program. The government seeks to pay benefits only to the low ability worker. In light of the 100 percent MTR each worker has essentially two options: work and earn enough, so that eligibility for benefits is forgone, or do not work at all and rely on government support. The incentive constraints should ensure that the low skill guy will indeed choose not to work whereas the high skill guy will choose to work and will not receive benefits. You need to calculate the utility associated with each one of these two options faced by the worker and write two incentive (inequality) constraints for the high skill guy and for the low skill one, respectively. You also need to formulate the revenue constraint of the government which takes into account the choice of the two individuals (one is working and the other is receiving benefits).You can skip the next three (more technical) parts and just show that when both the revenue constraint and the incentive constraint of the high skill agent are binding (satisfied as equalities) then the optimal tax rate is t=1/3. You will basically solve a system of two equations for two unknowns.Now we get to the interesting part. Assume that the wage rate of the low skill guy is zero – so he possesses no market skills at all. Calculate the utility of the low skill guy in this case and compare it with the optimal solution of the linear tax we have solved in class (the government would set the tax at the Laffer rate in this case - make sure you have got it right). Show that the SSI program makes the poor guy better off relative to the linear system. Try to provide interpretation. Think of the targeting advantages of the SSI system and the costs associated with crowding out the low-skill guy from the labor market. Is this a real cost given our parametric assumptions? Can you generalize the conclusion to the case in which the low skill guy will have a positive wage rate?
Production Cost Analysis help
Production Cost Analysis and Estimation Applied Problems**** ALL
parts answered and labeled with original work ****plagi ...
Production Cost Analysis help
Production Cost Analysis and Estimation Applied Problems**** ALL
parts answered and labeled with original work ****plagiarism report
must be attached pls***Introduction and conclusion paragragh required along with references
Please complete the following two applied problems:
Problem 1:
William is the owner of a small pizza shop and is thinking of
increasing products and lowering costs. William’s pizza shop owns four
ovens and the cost of the four ovens is $1,000. Each worker is paid $500
per week.
Workers employed
Qty of pizzas produced per week
0
1
2
3
4
5
6
7
8
0
75
180
360
600
900
1140
1260
1360
Show all of your calculations and processes. Describe your
answer for each question in complete sentences, whenever it is
necessary.
Which inputs are fixed and which are variable in the
production function of William’s pizza shop? Over what ranges do there
appear to be increasing, constant, and/or diminishing returns to the
number of workers employed?What number of workers appears to be most efficient in terms of pizza product per worker?What number of workers appears to minimize the marginal
cost of pizza production assuming that each pizza worker is paid $500
per week?Why would marginal productivity decline when you hire more workers in the short run after a certain level?How would expanding the business affect the economies of
scale? When would you have constant returns to scale or diseconomies of
scale? Describe your answer.
Problem 2:
The Paradise Shoes Company has estimated its weekly TVC function
from data collected over the past several months, as TVC = 3450 + 20Q +
0.008Q2 where TVC represents the total variable cost and Q represents
pairs of shoes produced per week. And its demand equation is Q = 4100 –
25P. The company is currently producing 1,000 pairs of shoes weekly and
is considering expanding its output to 1,200 pairs of shoes weekly. To
do this, it will have to lease another shoe-making machine ($2,000 per
week fixed payment until the lease period ends).
Show all of your calculations and processes. Describe your
answer for each item below in complete sentences, whenever it is
necessary.
Describe and derive an expression for the marginal cost (MC) curve.Describe and estimate the incremental costs of the extra 200 pairs per week (from 1,000 pairs to 1,200 pairs of shoes).What are the profit-maximizing price and output levels
for Paradise Shoes? Describe and calculate the profit-maximizing price
and output.Discuss whether or not Paradise Shoes should expand its
output further beyond 1,200 pairs per week. State all assumptions and
qualifications that underlie your recommendation.
6 pages
Answer 1
This assignment will allow you to demonstrate the following objectives: Calculate the annual payment on a loan using the p ...
Answer 1
This assignment will allow you to demonstrate the following objectives: Calculate the annual payment on a loan using the present value of an annuity.
6 pages
Economic Analysis
The Coca-Cola and Pepsi companies have, over the years, fought for dominance in the soft drink industry. The companies hav ...
Economic Analysis
The Coca-Cola and Pepsi companies have, over the years, fought for dominance in the soft drink industry. The companies have a 70% share of the United ...
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