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Homework 5

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Unit 5 [BU224 Assignment Template]

Unit 5 Assignment: Elasticity of Demand and Consumer Surplus

Name:

Course Number and Section:

Date:

General Instructions for all Assignments:

1. Unless specified differently by your course instructor, save this assignment template to your computer with the following file naming format:

Course number_section number_last name_first name_unit number

2. At the top of the template, insert the appropriate information:

Your name, course number and section, and the date

3. Insert your answers below, or in the appropriate space provided for in the question. Your answers should follow APA 6th edition format with citations to your sources and, at the bottom of your last page, a list of references. Your answers should also be in Standard English with correct spelling, punctuation, grammar, and style (double-spaced, in Times New Roman, 12–point, and black font). Respond to questions in a thorough manner, providing specific examples of concepts, topics, definitions, and other elements asked for in the questions.

4. Upload the completed Assignment to the appropriate Dropbox.

5. Any questions about the Assignment, or format questions, should be directed to your course instructor.

NOTE:

Before attempting to complete the Unit 5 Assignment, it is strongly recommended that you complete the TWO Learning Activities associated with this Assignment. The links to the Learning Activities are found within the course by selecting “Content”, then on “Unit 5”, then on “Assignment”, and then on “Unit 5 Assignment.” The links appear within the paragraph entitled “Learning Activity.”

Assignment:

In this Assignment, you will calculate the Price Elasticity of Demand, demonstrate a firm understanding of consumer choices based on differing marginal utilities, consumer surplus, and how the buying choice and amount of consumer surplus changes based on various pricing schemes.

In this Assignment, you will be assessed on the following outcome:

BU224-5: Examine how the concept of utility affects purchasing decisions by individuals and consumer surplus.

Questions

1. The accompanying table shows the price and monthly demand for barrels of gosum berries in Gondwanaland.

a. Using the midpoint method (show your work), calculate the price elasticity of demand when the price of a barrel of gosum berries rises from $10 to $20. What kind of elasticity is this value that you computed for the price elasticity of demand and what does it mean for how demand will change based on a change in price within this price range? (10 points)

b. Using the midpoint method (show your work), calculate the price elasticity of demand when the price of a barrel of gosum berries rises from $70 to $80. What kind of elasticity is this value that you computed for the price elasticity of demand and what does it mean for how demand will change based on a change in price within this price range? (10 points)

c. Notice that the estimates from (a) and (b) above are different. Why do price elasticity of demand estimates change along the demand curve? (10 points)

2. Matilda is downloading music and videos from an online site. She is currently buying three music downloads that cost $3 each and two video downloads that also cost $3 each. The table below indicates what she reports as the marginal utility of the last music download and of the last video download in this combination of purchases.

As an assignment for her Microeconomics course, Matilda used the marginal utilities that she gave to her 3rd music download and her 2nd video download to complete the Experiment Tally Sheet below. Her available budget was $19.00.

a. A consumer maximizes utility when the last dollar spent on any good generates the same satisfaction as the last dollar spent on every other good. Is Matilda maximizing her utility? Explain your answer. (3 points)

b. Should Matilda consume one more video download, to move her closer to her optimum utility? Explain your answer. (3 points)

c. Should Matilda consume one less music download and one more video download, to move her closer to her optimum utility? Explain your answer. (3 points)

d. Should Matilda consume one more music download, to move her closer to her optimum utility? Explain your answer. (3 points)

3. Brandon and his family often rent movies from the new internet movie streaming service, Xanadu. The table below shows Brandon’s demand schedule for eight movie rentals that Brandon’s family is interested in watching.

a. If the price of each movie rental from Xanadu is $3, how many movie rentals will Brandon buy and how much consumer surplus does Brandon receive? Explain your answer. (5 points)

b. If the price of each movie rental from Xanadu is $5, how many movie rentals will Brandon buy and how much consumer surplus does Brandon receive? Explain your answer. (5 points)

c. If the Xanadu online service offers as many movie rentals as the customer wants to download, all for a one-time fee of $25.00, how many movie rentals will Brandon download and how much consumer surplus will Brandon receive? Explain your answer. (5 points)

d. If the Xanadu online service offers as many movie rentals as the customer wants to download, all for a one-time fee of $35.00, how many movie rentals will Brandon download and how much consumer surplus will Brandon receive? Explain your answer. (5 points)

e. If the Xanadu’s market research showed that Brandon’s demand represented what most of Xanadu’s customers wanted, what would be the most that Xanadu could charge as a one-time fee for all the downloads that the customer wanted? (4 points)

4. Newspaper vending machines are designed so that once you have paid for one paper; you have access to all the papers in the machine and could take multiple papers at a time. However, other vending machines dispense only one item (the item you bought). You do not have access to all the goods (sodas, candy, snacks, etc.) at one time. Using the concept of marginal utility, explain why these vending machines differ? (6 points)

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References:

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Homework 5

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Homework 4B

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Homework 4A

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Homework 4

TEMPLATE.docx

Unit 4 [BU224 Assignment Template]

Name:

Course Number and Section:

Date:

General Instructions for all Assignments:

1. Unless specified differently by your course instructor, save this assignment template to your computer with the following file naming format:

Course number_section number_last name_first name_unit number

2. At the top of the template, insert the appropriate information:

Your name, course number and section, and the date

3. Insert your answers below, or in the appropriate space provided for in the question. Your answers should follow APA 6th edition format with citations to your sources and, at the bottom of your last page, a list of references. Your answers should also be in Standard English with correct spelling, punctuation, grammar, and style (double-spaced, in Times New Roman, in 12–point, and black font). Respond to questions in a thorough manner, providing specific examples of concepts, topics, definitions, and other elements asked for in the questions.

4. Upload the completed Assignment to the appropriate Dropbox.

5. Any questions about the Assignment, or format questions, should be directed to your course instructor.

Assignment:

In this Assignment, you will focus on marginal utility, Price Elasticity of Demand, and understanding the difference between Price Elasticity of Demand and Income Elasticity of Demand.

We all subconsciously assign “scores” to what we are considering to purchase, based on our expected level of “satisfaction” (Marginal Utility) with that purchase. When making simultaneous pairs of purchases, again we subconsciously compare the amount of “satisfaction” (Marginal Utility) that we will receive from the pair of purchases. To decide on the “ideal” combination of these two purchases, we expect that the last dollar we spend on each of the items will give us the “same” satisfaction per dollar (Marginal Utility per dollar). Further, we know that the MORE of an item that we get, the next one we get will give us LESS “satisfaction” (Marginal Utility) than the last one gave us (the Law of Diminishing Marginal Utility). Using what you have learned about Marginal Utility and Marginal Utility per dollar, answer the following questions.

Questions

1. Jane has been working all day, missing both her breakfast and lunch. Finally able to leave work, after being required to work a couple of overtime hours, she is starving. Jane has $20 in her pocket, so she stops at a local fast food restaurant and orders a grilled chicken sandwich and an order of fries. As she sits down to eat them, a University student approaches her and tells her that she is doing a research project for her microeconomics course, and would like to ask Jane a few quick questions. Jane agrees and the student asks what “score” (marginal utility) from 1 to 100 would she give as her satisfaction level with the 1st sandwich and the 1st fries? After eating that order, Jane is still hungry and orders a second chicken sandwich and another order of fries. Again, the student asks Jane to give her new scores. Since Jane has not eaten all day, she is hungry enough to order a third round of food and again gives “scores” to the inquisitive student.

The student filled in the shaded cells based on Jane’s responses, then computed the values in the remaining cells. Using this information, answer the following questions:

Student’s completed experiment tally sheet. Available budget is $20.

a. Is Jane maximizing her utility? Explain your reasoning and show any calculations. (2 points)

b. If Jane is not maximizing her utility, remembering the Law of Diminishing Marginal Utility, would she be better off to buy one less chicken sandwich and one more order of fries? Explain your reasoning and show any calculations. (2 points)

c. If Jane is not maximizing her utility with the original purchase combination, remembering the Law of Diminishing Marginal Utility, would she be better off buying just one more order of fries? Explain your reasoning and show any calculations. (2 points)

d. If Jane is not maximizing her utility with the original purchase, remembering the Law of Diminishing Marginal Utility, would she be better off buying one less order of fries and one more chicken sandwich? Explain your reasoning and show any calculations. (2 points)

2. Remembering the Learning Activity in Unit 3, in the year 107 WBCE (Way Before the Common Era) the Gondwanaland Chairman of Production reported that the gosum berry growers could meet an average demand of 700 barrels of gosum berries per month at an average a price of $70 per barrel.

In the year 108 WBCE, the growers were plagued with a gosum berry bug infestation that reduced average output, causing production to fall to only 600 barrels per month, causing the price to rise to $84 per barrel. The following table shows the Chairman’s report:

a. Using the midpoint method, calculate the price elasticity of demand for Gondwanaland gosum berries. Explain what this price elasticity of demand means? (6 points)

b. Complete the table below by calculating what the monthly average total revenue is for year 107, what the monthly average total revenue is for year 108, and the change in average total monthly revenue for these two years. How have these numbers changed? (4 points)

c. Using your answer to part a. above, how could you have predicted the change in total monthly revenue that you found in part b. above? (6 points)

3. The Gondwanaland Chairman of Production reported that the new Altair chariots (most modern, horse drawn family chariot) had a PRICE elasticity of 3 and an INCOME elasticity of 2. The supply of these Altair chariots is elastic. Evaluate the following statements and explain why you think they are true, or false.

a. A 20% increase in the price of the Altair chariot will cause the quantity demanded to fall by an astounding 60%. (4 points)

b. An increase in Gondwanaland consumers’ incomes will cause prices to rise, but the total quantity demanded will also increase. (4 points)

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References:

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Homework 3B

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Homework 3A

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Homework 3

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Unit 3 [BU224 Assignment Template]

Unit 3 Assignment: Supply and Demand

Name:

Course Number and Section:

Date:

General Instructions for all Assignments:

1. Unless specified differently by your course instructor, save this assignment template to your computer with the following file naming format:

Course number_section number_last name_first name_unit number

Your name, course number and section, and the date

3. Insert your answers below, or in the appropriate space provided for in the question. Your answers should follow APA 6th edition format with citations to your sources and, at the bottom of your last page, a list of references. Your answers should also be in Standard English with correct spelling, punctuation, grammar, and style (double-spaced, in Times New Roman, in 12–point, and black font). Respond to questions in a thorough manner, providing specific examples of concepts, topics, definitions, and other elements asked for in the questions.

4. Upload the completed Assignment to the appropriate Dropbox.

5. Any questions about the Assignment, or format questions, should be directed to your course instructor.

NOTE:

Before attempting to complete the Unit 3 Assignment, it is strongly recommended that you complete the TWO Learning Activities associated with this Assignment. The links to the Learning Activities are found within the course by selecting “Content”, then on “Unit 3”, then on “Assignment”, and then on “Unit 3 Assignment.” The links appear within the paragraph entitled “Learning Activity.”

Assignment:

In this Assignment, you will demonstrate your understanding of the Production Possibility Frontier model, marginal opportunity costs, and the differences in marginal opportunity costs. You will also demonstrate your understanding of the differences between Absolute Advantage and Comparative Advantage in different situations. Additionally, you will demonstrate a clear understanding of the crucial concept of supply and demand, and the impact on the original group caused by a change in demand.

In this Assignment, you will be assessed based on the following outcome:

BU224-1: Examine how various supply and demand scenarios affect the way prices and quantities are set by market interactions in perfectly competitive markets.

Questions

1. In ancient days a tribe of natives on the mythical continent of Atlantis were able to produce two commodities to eat. They could harvest fish from the sea and they could grow a form of wild oats. Table 1.a. and Graph 1.a. both show the maximum annual output combinations of fish and wild oats that could be produced by the natives of Atlantis.

Table 1.a.

Graph 1.a.

a. Could the Atlantis tribe have produced 800 bushels of wild oats and 5,000 kilograms of fish at the same time? Explain why. (3 points)

b. Where would this point lie relative to the production possibility frontier? (2 points)

c. Using Table 1.a., what would have been the marginal opportunity cost of increasing the annual output of wild oats by 200 bushels, from 300 bushels up to 500 bushels? (3 points)

d. Using Table 1.a., what would have been the marginal opportunity cost of increasing the annual output of wild oats by 200 bushels, from 625 bushels up to 825 bushels? (3 points)

e. Why are the marginal opportunity costs for two similar batches of 200 bushels of wild oats not the same? Explain. (3 points)

f. What does this difference imply about the shape of the Atlantis tribe’s production possibility frontier curve? (3 points)

2. In the neighboring groups of New Yorkers and New Jersian’s, each produces only two products, bagels and calzones. By themselves, the New Yorkers, each day, can produce either 45 pounds of bagels and no calzones, or 30 pounds of calzones and no bagels, or any combination in between. The New Jersian’s, by themselves, each day, can produce 30 pounds of bagels and no calzones, or 28 pounds of calzones and no bagels, or any combination in between. Diagram 1.a. shows the daily Production Possibility Frontier for the New Yorkers and Diagram 1.b. shows the daily Production Possibility Frontier for the New Jersian’s.

Table 1.a.

Table 1.b.

a. Examine Diagram 1.a. showing the daily Production Possibility Frontier for the New Yorkers and Diagram 1.b. showing the daily Production Possibility Frontier for the New Jersian’s. Which group has the absolute advantage in bagels production? Show your calculations and explain why. (3 points)

b. Examine Diagram 1.a. showing the daily Production Possibility Frontier for the New Yorkers and Diagram 1.b. showing the daily Production Possibility Frontier for the New Jersian’s. Which group has the absolute advantage in calzones production? Show your calculations and explain why. (3 points)

c. Examine Diagram 1.a. showing the daily Production Possibility Frontier for the New Yorkers and Diagram 1.b. showing the daily Production Possibility Frontier for the New Jersian’s. Which group has the comparative advantage in calzones production? Show your calculations and explain why. (4 points)

d. Examine Diagram 1.a. showing the daily Production Possibility Frontier for the New Yorkers and Diagram 1.b. showing the daily Production Possibility Frontier for the New Jersian’s. Which group has the comparative advantage in bagels production? Show your calculations and explain why. (4 points)

Later, the New Yorkers discover a new technology for making calzones that dramatically increases the quantity of calzones they can produce each day. Diagram 1.c. shows both the old and the new daily production possibility frontier for the New Yorkers. The New Yorkers, each day, can now produce either 45 pounds of bagels and no calzones, or 50 pounds of calzones and no bagels, or any combination in between. Diagram 1.c. shows both the old and the new daily Production Possibility Frontiers for the New Yorkers and Diagram 1.b. shows the unchanged daily Production Possibility Frontier for the New Jersian’s.

Table 1.b.

e. Examine Diagram 1.c. showing both the old and the new daily Production Possibility Frontier for the New Yorkers and Diagram 1.b. showing the daily Production Possibility Frontier for the New Jersian’s. Which group NOW has the absolute advantage in bagels production? Show your calculations and explain why. (3 points)

f. Examine Diagram 1.c. showing both old and the new daily Production Possibility Frontier for the New Yorkers and Diagram 1.b. showing the daily Production Possibility Frontier for the New Jersian’s. Which group NOW has the absolute advantage in calzones production? Show your calculations and explain why. (3 points)

g. Examine Diagram 1.c. showing both the old and the new daily Production Possibility Frontier for the New Yorkers and Diagram 1.b. showing the daily Production Possibility Frontier for the New Jersian’s. Which group NOW has the comparative advantage in bagels production? Show your calculations and explain why this is important. (5 points)

h. Examine diagram 1.c. showing both old and the new daily Production Possibility Frontier for the New Yorkers and diagram 1.b. showing the daily Production Possibility Frontier for the New Jersian’s. Which group NOW has the comparative advantage in calzones production? Show your calculations and explain why this is important. (5 points)

3. Suppose that the supply schedule of Brazilian Coffee beans is as follows:

Suppose that Brazilian Coffee beans can be sold only in Brazil. The domestic Brazilian demand schedule for Brazilian Coffee beans is as follows:

a. From the supply and demand schedules above , what are the equilibrium price and quantity of Brazilian Coffee beans? (3 points)

Now suppose that Brazilian Coffee beans can also be sold in Canada. The Canadian demand schedule for Brazilian Coffee beans is as follows:

b. Complete the following table by inserting the total Brazilian Coffee beans demanded by both the Brazilians and Canadians at each price (the combined (total) demand schedule for Brazilian Coffee beans). (5 points)

Graph 2.b. depicts the change in supply and demand of Brazilian Coffee beans.

c. From the supply schedule and the combined Canadian and Brazilian demand schedule, what will be the new price at which Brazilian coffee growers can sell Brazilian Coffee beans? (5 points)

d. With the Brazilian coffee growers selling to both the Canadians and the Brazilians, what price will be paid by Brazilian consumers? (6 points)

e. With the Brazilian coffee growers selling to both the Canadians and the Brazilians, what will be the quantity consumed by Brazilian consumers? (6 points)

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References:

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Homework 2

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In this Assignment, you will be assessed based on the following outcomes:

GEL-1.02: Demonstrate college-level communication through the composition of original materials in Standard English.

Unit 2 [BU224 Assignment Template]

PC-4.1: Assess the value of multiculturalism and diversity in a global environment.

Page 1 of 3

In this Assignment, you will conduct the appropriate research to answer the assigned questions and create a 3-4 page expository research paper.

Assignment

An effective understanding of economics forms the foundation of every manager’s, entrepreneur’s, bureaucrats, and leader’s ability to analyze business situations and to develop an appropriate response. The globalization of business is a fact of life for all business professionals. One of the most contentious issues in today’s global business world is the issue of closing local manufacturing facilities, laying off those American workers, and re-opening the same manufacturing facility in an Asian, or other third world country.

Look in your own closet at the clothes you have purchased. Pick any 10 items of clothing and look at the labels in those clothes. Where were they manufactured? How many of the 10 items were manufactured here in America? If that same exercise had been done 50 years ago, (approximately the 1970s), all the clothes you owned would have been manufactured in textile mills in the Southeastern United States (Georgia, Alabama, Mississippi, North Carolina, South Carolina, etc.). All those Southeastern textile mills are now closed, and people buy foreign made clothes. If you were able to go further back in time to 150 years ago (1870s), the clothes you owned would have been manufactured in textile mills in the Northeast United States (Maine, New Hampshire, Vermont, Massachusetts, etc.). Yet, by the early to mid-1950s, those Northeastern textile mills were closed and their workers were out of a job. The mills had all relocated to the Southeast during the years following the Civil War.

Many people say that we should ban the import of these foreign made clothes, so that more workers in American clothing textile mills could have jobs. Others say that we should continue to import clothing because imported clothing is relatively less expensive and more people can afford to buy more clothes at these low prices. Still others say that we should put an import tariff (an extra tax that would be paid when we buy these imported clothes), making the price of imported clothing comparable to the price of clothing made in the U.S., and, therefore, encouraging American consumers to buy American-made clothing.

Questions

Before answering the following questions, review the Assignment Checklist. Then, in a separate Word document, answer the following questions in a 3–4 page expository research paper:

1. How much does international trade affect you personally? Look at any 10 items around your home that you have purchased in the last year. Where were they made? How many were made in America, compared to how many were foreign made? What things does America export to other countries? What things does America import from other countries? How does what you have learned about Comparative Advantage affect this trade?

2. Currently there is a lot of talk among politicians about imposing tariffs on foreign made products imported into the U.S. and retaliatory tariffs imposed by foreign countries on U.S. made goods. What is a tariff? Who ultimately pays the tariff? Who gets the proceeds from the tariffs? What is the money used for? Discuss the advantages and disadvantages to all involved parties (American workers, American consumers, foreign workers, and foreign consumers) of tariffs on imports to the U.S. and retaliatory tariffs imposed by foreign countries on U.S. made goods.

3. In considering the foreign trade issue, discuss how the background, education and cultures of the people in the U.S. and the cultures in each trading country affects their understanding of the importance of foreign trade. Discuss the importance of your ability to understand and accept multiple cultural differences in a global context. What recommendations would you suggest to increase American understanding and acceptance of foreign cultures?

Assignment Checklist:

· Write your paper in a separate Word document.

· Unless specified differently by your course instructor, save your Assignment to your computer with the following file naming format: Course number_section number_last name_first name_unit number

· Your title page should, at a minimum, contain the following information: Your name, course number, section number, date, and the title of your paper

· Write a 3–4 page paper (in addition to the title and reference pages) following APA 6th edition format with citations to any quoted, or paraphrased sources. Your written research should also be in Standard English with correct spelling, punctuation, grammar, and style (double-spaced, in Times New Roman, 12–point, and in black font).

· Your paper should provide a clearly established and sustained viewpoint and purpose.

· Your writing should be well ordered, logical and unified, as well as original and insightful.

· Cite and reference your academically credible sources from the Library and any other academically oriented online sources. Review the APA formats found in Writing Resources accessed through the Academic Success Center within the Academic Tools area of the course.

· Review the Rubric below to ensure all points have been captured in the paper.

Directions for Submitting your Assignment

Be sure to respond to all the questions using the critical elements listed in the Assignment Checklist and submit your paper to the Unit 2 Assignment Dropbox by Tuesday, midnight ET of this unit.

Homework 2

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Homework 1

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Unit 1 [BU224 Assignment Template]

Name:

Course Number and Section:

Date:

General Instructions for all Assignments:

1. Unless specified differently by your course instructor, save this assignment template to your computer with the following file naming format:

Course number_section number_last name_first name_unit number

2. At the top of the template, insert the appropriate information:

3. Insert your answers below, or in the appropriate space provided for in the question. Your answers should follow APA 6th edition format with citations to your sources and, at the bottom of your last page, a list of references. Your answers should also be in Standard English with correct spelling, punctuation, grammar, and style double-spaced, in Times New Roman, in 12–point, and black font). Respond to questions in a thorough manner, providing specific examples of concepts, topics, definitions, and other elements asked for in the questions.

4. Upload the completed Assignment to the appropriate Dropbox.

5. Any questions about the Assignment, or format questions, should be directed to your course instructor.

Assignment:

In this Assignment, you will demonstrate your understanding of certain economic principles that underlie virtually all decisions that people make. Specifically, the concept of Opportunity Costs by selecting the correct underlying principle and explaining in a series of logical steps which would likely produce the results described.

Questions

1. Howard needs to buy a laptop computer to start online university courses. The price at the local computer store is $650. The identical computer is available at one online site for $605 and another site, for $622. All prices include the appropriate sales tax. The accompanying table indicates the typical shipping and handling charges for the computer ordered online.

a. Define “opportunity cost” in economic terms. (3 points)

b. In this situation, what are the opportunity costs of Howard choosing to buy online instead of at the local computer store? Note that if you buy the computer online, you must wait to get it. (4 points)

c. List all the possible choices for Howard, including their relevant differences in price and delivery time. (4 points)

d. What determines which of these choices Howard will choose? (3 points)

2. During the improving economic conditions of 2015 and early 2016 much additional construction of homes and condos throughout much of the U.S. took place. This provided a significant increase in the income of workers in the construction trades. Many of the construction workers were immigrants and have family and relatives in other countries. Often these workers would send part of their income to their less fortunate relatives in their old country, especially in Mexico and some of the South American countries.

a. Which of the economic principles best describes this situation? (4 points)

b. Using the principle you have selected, describe the chain of events that best explains how the increased money sent to families in these South American countries will cycle through the economy of that country and what overall affect it will have within the economy. (5 points)

3. From June 2008 oil was at a high of $144.78 per barrel. During the period from April 2011 until July of 2014, the price of oil hovered between about $115.32 per barrel and about $105.22 a barrel. Then, starting in August 2014 oil began a precipitous fall in price from the $105.22 to $33.62 a barrel in January 2016. Although the U.S. has great amounts of oil that can be brought out of the ground by “fracking,” by the beginning of 2016 many of the workers in the U.S. oil exploration and drilling industry were out of work and tremendous amounts of oil exploration equipment was sitting in the equivalent of “used car lots” to be sold.

a. Which of the economic principles best describes this situation? (4 points)

b. Using the principle you have selected, describe the chain of links that best explains how the falling international oil prices caused U. S. workers to be laid off and available U.S. oil to be left in the ground. (5 points)

_________________

References:

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Homework 1

Hint.pdf

Homework 9

TEMPLATE.docx

Name:

Course Number and Section:

Date:

General Instructions for all Assignments

1. Unless specified differently by your course instructor, save this assignment template to your computer with the following file naming format: Course number_section number_last name_first name_unit number

2. At the top of the template, insert the appropriate information: Your name, course number and section, and the date

3. Insert your answers below, or in the appropriate space provided for in the question. Your answers should follow APA 6th edition format with citations to your sources and, at the bottom of your last page, a list of references. Your answers should also be in Standard English with correct spelling, punctuation, grammar, and style (double-spaced, in Times New Roman, 12–point, and black font). Respond to questions in a thorough manner, providing specific examples of concepts, topics, definitions, and other elements asked for in the questions.

4. Upload the completed Assignment to the appropriate Dropbox.

5. Any questions about the Assignment, or format questions, should be directed to your course instructor.

Assignment

In this Assignment, you will demonstrate your understanding of monopoly pricing, based on different management criteria, the impact of price regulation of monopolies, and provide detailed explanations of how price effect and quantity effect cause marginal revenue to be different from the price.

Questions

1. The Gulf Sea Turtle Conservation Group (GSTCG), a non–profit group of volunteers working to collect data on nesting sea turtles and to promote sea turtle conservation, is considering creating a video to educate people about sea turtle conservation. The cost of duplicating a video on a DVD and mailing the DVD is $5.56. In a GSTCG member meeting, the video plan was discussed.

The first two columns of Table 1 below shows the expected demand for the DVD at different suggested donation levels, and they can act as a single-price monopolist if they choose to. The receipts will be used to fund GSTCG supplies for their data collection and conservation work. At the end of each sea turtle nesting season, any excess funds are donated by the GSTCG to a local non-profit sea turtle research and rehabilitation facility.

a. Complete Table 1 by computing the Total Revenue, Marginal Revenue, Total Cost, and Profit columns, each rounded to two decimal places. The cost of duplicating a video on a DVD and mailing the DVD, the Marginal Cost, is $5.56 . (1 point)

Table 1

b. The President wants the GSTCG to provide videos to generate the most possible donations (Total Revenue). What price is the President of the GSTCG favoring and how many people will receive the DVD if this becomes the price of the suggested donation? Explain your answers. (1 point)

c. The Education Outreach Committee wants the GSTCG to provide videos to the most possible number of people. What price is the Educational Outreach Committee favoring and how many people will receive the DVD if this becomes the price of the suggested donation? Explain your answers. (1 point)

d. The Treasurer of the GSTCG wants the DVD program to be as efficient as possible so that the marginal revenue equals marginal cost. What price is the Treasurer favoring and how many people will receive the DVD if this becomes the price of the suggested donation? Explain your answers. (1 point)

e. The Fundraising Committee wants the DVD program to generate as much profit in donations as possible. What price is the Fundraising Committee favoring and how many people will receive the DVD if this becomes the price of the suggested donation? Explain your answers.  (1 point)

2. Imagine an Island a short distance off the east coast of a country. This island is called Onus, and it has a population of about 500 residents. Their only way to the mainland is by the ONE ferry boat that runs between Onus and the mainland (the ferry operates as a monopoly).

Similarly, a short distance off the west coast of the same country is another island, Yuri, with a similar population of about 500 residents. Yuri, however, is a tourist attraction. There are MANY ferry boats running between Yuri and the mainland (each ferry operating in this perfectly competitive market). Each Yuri ferry operator provides service to both the tourists and to the 500 west coast island residents.

Using the information that you learned in Chapter 13 of the text, answer the following questions by comparing and contrasting the differences between the monopoly market in Onus and the perfectly competitive market in Yuri.

a. Explain in detail what differences in demand that the monopoly ferry operator on the east coast island of Onus will experience compared to the demand that a single ferry operator will experience in the perfectly competitive west coast market of Yuri. (2 points)

b. Both the Onus ferry operator in the monopoly market and each of the Yuri ferry operators in the perfectly competitive market will want to produce at the point that the marginal revenue is equal to the marginal cost. Explain in detail the two reasons that the monopoly’s marginal revenue will always be less than its price while the marginal revenue in the perfectly competitive market will always be equal to the market price. (2 points)

c. Explain in detail how the monopoly ferry operator will determine the quantity of ferry service that she will provide to the 500 residents of Onus. Also explain how that monopoly quantity will compare to the total quantity of ferry service available to the 500 residents of the perfectly competitive market of Yuri by ALL the Yuri ferry providers. (2 points)

d. Explain in detail how the monopoly ferry operator in Onus will determine the price she will charge the island residents for ferry service and how that price will differ from the price experienced by the island residents and tourists in the perfectly competitive market of Yuri. (2 points)

3. Onus residents, in questions 2.a.–d. above, complain to their local politicians about the high prices. In an attempt to reduce the exorbitant price that the residents must pay for ferry service to and from the mainland, the local politicians convince the legislature to create a regulatory board which will impose a legal price ceiling on the Onus monopoly ferry operator.

a. In this scenario, the regulatory board imposed a price ceiling on the Onus monopoly ferry operator that was calculated to be below the ferry operator’s lowest ATC, but well above its lowest AVC. Explain in significant detail, what will be the short run and long run impacts of such a price ceiling on the Onus monopoly ferry operator’s profits and continued ability to provide service to the inhabitants of the island of Onus. (4 points)

b. In this scenario, the regulatory board imposed a price ceiling on the Onus monopoly ferry operator that was calculated to be well above the ferry owner’s lowest AVC and equal to the ferry owner’s lowest ATC. Explain in significant detail, what will be the short run and long run impacts of such a price ceiling on the Onus monopoly ferry operator’s profits and continued ability to provide service to the inhabitants of the island of Onus. (3 points)

c. In this scenario, the regulatory board, imposed a price ceiling on the Onus ferry operator that was calculated to be well above the ferry owner’s lowest AVC and well above the ferry owner’s lowest ATC. Explain in significant detail, what will be the short run and long run impacts of such a price ceiling on the Onus monopoly ferry operator’s profits and continued ability to provide service to the inhabitants of the east coast island of Onus. (4 points)

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References:

Homework 9

Hint.pdf

Homework 8

TEMPLATE.docx

Unit 8 [224 Assignment Template]

Name:

Course Number and Section:

Date:

General Instructions for all Assignments

1. Unless specified differently by your course instructor, save this assignment template to your computer with the following file naming format: Course number_section number_last name_first name_unit number

2. At the top of the template, insert the appropriate information: Your name, course number and section, and the date

3. Insert your answers below, or in the appropriate space provided for in the question. Your answers should follow APA 6th edition format with citations to your sources and, at the bottom of your last page, a list of references. Your answers should also be in Standard English with correct spelling, punctuation, grammar, and style (double-spaced, in Times New Roman, 12–point, and black font). Respond to questions in a thorough manner, providing specific examples of concepts, topics, definitions, and other elements asked for in the questions.

4. Upload the completed Assignment to the appropriate Dropbox.

5. Any questions about the Assignment, or format questions, should be directed to your course instructor.

NOTE:

Before attempting to complete this Assignment, it is strongly recommended that you complete the Learning Activity associated with this Assignment. The link to the Learning Activity is found within the course by selecting on “Content”, then on “Unit 8”, then on “Assignment”, and then on “Unit 8 Assignment.” The link appears within the paragraph entitled “Learning Activity.”

In this Assignment, you will be assessed on the following outcomes:

BU224-3: Examine how changes in the cost of production affect pricing and production quantity decisions of a firm in a perfectly competitive market.

GEL-8.02: Apply critical thinking to use principles of sound reasoning.

Assignment

In this Assignment, you will define and calculate the remaining six major cost elements of a business, when given the Total Costs and the Quantity Produced, as well as to use the computed costs to determine a minimum cost output level for that business. In addition, you will compute both the break-even price and the shutdown price for a hypothetical business in a perfectly competitive market, determine if that business would incur an economic profit at various market prices, and if the business should continue to produce at each of those price levels.

Questions

Table 2.a. shows an LED light bulb manufacturer’s total cost of producing LED light bulbs.

Table 2.a.

1. What is this manufacturer’s fixed cost? Explain why. (1 point)

2. Assuming that you only know the Total Costs (TC) (as is shown in the Table 2.a. above) explain how you would calculate each of the following:

a. Variable Cost (VC) (1 point);

b. Average Variable Cost (AVC (1 point));

c. Average Total Cost (ATC) (1 point);

d. Average Fixed Cost (AFC) (1 point) ; and,

e. Marginal Costs (of a single case). (1 point)

3. In Table 3.a., for each level of output, insert into the table the values for:

a. the Variable Cost (VC);

b. the Average Variable Cost (AVC);

c. the Average Total Cost (ATC); and,

d. the Average Fixed Cost (AFC).

Table 3.a.

e. Given the information you computed in Table 3.a., what is the minimum cost output level? Explain why. (5 points)

4. Brenda Smith operates her own farm raising chickens and producing eggs. She sells her eggs at the local farmers’ market where there are several other egg producers also selling eggs by the dozen. (Brenda operates in a perfectly competitive market in which she is a “price taker.”) In order to make sure she does not lose money on selling eggs, she does an analysis of her costs for producing eggs as shown on Table 4.a.

Table 4.a.

a. What is Brenda’s break-even price for a dozen of eggs? Explain how you found that answer. (6 points)

b. What is Brenda’s shut-down price for a dozen of eggs? Explain how you found that answer. (6 points)

c. If the market price of a dozen eggs at the local farmers market is $1.45 per dozen, will Brenda make an economic profit? Explain how you determined your answer. (4 points)

d. If the market price of a dozen eggs at the local farmers market is $1.45 per dozen, should Brenda continue producing eggs in the short run? Explain how you determined your answer. (4 points)

e. If the market price of a dozen eggs at the local farmers market is 72 cents per dozen, will Brenda make an economic profit? Explain how you determined your answer. (4 points)

f. If the market price of a dozen eggs at the local farmers market is 72 cents per dozen, should Brenda continue producing eggs in the short run? Explain how you determined your answer. (6 points)

g. If the market price of a dozen eggs at the local farmers market is 64 cents per dozen, will Brenda make an economic profit? Explain how you determined your answer. (5 points)

h. If the market price of a dozen eggs at the local farmers market is 64 cents per dozen, should Brenda continue producing eggs in the short run? Explain how you determined your answer. (6 points)

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References:

Page 1 of 6

Homework 8

Hint.pdf

Homework 7

TEMPLATE.docx

Unit 7 [BU224 Assignment Template]

Name:

Course Number and Section:

Date:

General Instructions for all Assignments

1. Unless specified differently by your course instructor, save this assignment template to your computer with the following file naming format: Course number_section number_last name_first name_unit number

2. At the top of the template, insert the appropriate information: Your name, course number and section, and the date

3. Insert your answers below, or in the appropriate space provided for in the question. Your answers should follow APA 6th edition format with citations to your sources and, at the bottom of your last page, a list of references. Your answers should also be in Standard English with correct spelling, punctuation, grammar, and style (double-spaced, in Times New Roman, 12–point, and black font). Respond to questions in a thorough manner, providing specific examples of concepts, topics, definitions, and other elements asked for in the questions.

4. Upload the completed Assignment to the appropriate Dropbox.

5. Any questions about the Assignment, or format questions, should be directed to your course instructor.

Assignment

In this Assignment, you will define and calculate the remaining six major cost elements of a business, when given the total costs and the quantity produced, as well as use the computed costs to determine a minimum cost output level for that business. In addition, you will also clearly explain how the average total cost of a new output level is affected by its share of fixed costs and variable costs.

Questions

1. When ONLY Total Costs (TC) are known , explain how to calculate each of the following:

a. Fixed Costs (FC) (1 point)

b. Variable Costs (VC) (1 point)

c. Average Variable Costs (AVC) (1 point)

d. Average Total Costs (ATC) (1 point)

e. Average Fixed Costs (AFC) (1 point)

f. Marginal Costs (MC) (1 point)

2. Table 1 shows the hourly production and Total Cost estimates for a new manufacturing firm wishing to enter the smartphone market. Fill in the blank cells in columns a., b., c., d., and e. on the table by computing the appropriate values.

Table 1

3. Based on your calculations in completing the table in Question 2, what is this manufacturer’s minimum cost output level? Explain your answer. (3 points)

4. According to textbook page 334, when one additional unit is produced, two factors directly impact the change in average total costs, the Spreading effect and the Diminishing Returns effect. In the following two situations, explain how the factors of the Spreading effect and the Diminishing Returns effect cause the average total cost to be different.

a. Production of the 10th Gizmo resulted in an average total cost (ATC) of $20, but production of the 11th Gizmo resulted in an average total cost of $22. (3 points)

b. Production of the 10th Gizmo resulted in an average total cost (ATC) of $20, but production of the 11th Gizmo resulted in an average total cost of $18. (3 points)

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References:

Page 2 of 4

Homework 7

Hint.pdf

Homework 6

TEMPLATE.docx

Unit 6 [BU224 Assignment Template]

Unit 6 Assignment: Governmental Price Controls

Name:

Course Number and Section:

Date:

General Instructions for all Assignments

1. Unless specified differently by your course instructor, save this assignment template to your computer with the following file naming format: Course number_section number_last name_first name_unit number

2. At the top of the template, insert the appropriate information: Your name, course number and section, and the date

3. Insert your answers below, or in the appropriate space provided for in the question. Your answers should follow APA 6th edition format with citations to your sources and, at the bottom of your last page, a list of references. Your answers should also be in Standard English with correct spelling, punctuation, grammar, and style (double-spaced, in Times New Roman, 12–point, and black font). Respond to questions in a thorough manner, providing specific examples of concepts, topics, definitions, and other elements asked for in the questions.

4. Upload the completed Assignment to the appropriate Dropbox.

5. Any questions about the Assignment, or format questions, should be directed to your course instructor.

NOTE:

Before attempting to complete this Assignment, it is strongly recommended that you complete the Learning Activity associated with this Assignment. The link to the Learning Activity is found within the course by selecting on “Content”, then on “Unit 6”, then on “Assignment”, and then on “Unit 6 Assignment.” The link appears within the paragraph entitled “Learning Activity.”

In this Assignment, you will be assessed based on the following outcome:

BU224-2: Examine changes in price and quantity caused when governments take actions to modify market outcomes.

Assignment

In a perfectly competitive market, the equilibrium price and quantity represent the most efficient operation of that market. Optimum efficiency means that sellers cannot be made better off without, at the same time, making buyers worse off, and that buyers cannot be made better off, without making the sellers worse off. This Assignment presents a scenario in which a government tries to improve the financial position of the sellers, in such a perfectly competitive market, by instituting a legal price floor that is significantly above the equilibrium price. A price floor is the lowest price for which a seller can legally sell the product.

You will focus on calculating the consumer surplus, producer surplus, and total surplus both before a price floor is established and after a price floor is enacted. You will also demonstrate an understanding of the impact on the entire economy, based on any changes in taxes required, if the government is to purchase any extra product that is not sold to consumers.

This Assignment presents a scenario in which a government tries to improve the financial position of the sellers, in such a perfectly competitive market, by instituting a legal price floor that is significantly above the equilibrium price. A price floor is the lowest price for which a seller can legally sell the product.

Questions

Suppose that the Gondwanaland Chairman of Production, who sets the governmental price floor for gosum berries, in an effort to assist the gosum berry producers to have a higher income, set the price floor at $70 per barrel. In that particular year, the amount of gosum berries produced at the $70 price floor was 700 barrels per month. To support the price of gosum berries, the Chairman of Production’s Office had to purchase 400 barrels per month. The accompanying chart and diagram shows supply and demand curves illustrating the market for Gondwanaland gosum berries.

The accompanying diagram shows supply and demand curves illustrating the market for Gondwanaland gosum berries. Utilizing this information, answer the following questions.

1. In the absence of a price floor, the maximum price that a few of the consumers are willing to pay up to $100 per barrel of gosum berries. The market equilibrium (E) price is $50 per barrel. How much consumer surplus is created when there is no price floor? Show your calculations. (4 points)

2. How much producer surplus is created when there is no price floor? Show your calculations. (4 points)

3. What is the total surplus when there is no price floor? Show your calculations. (4 points)

4. After the price floor is instituted, the legal minimum price that can be charged by suppliers is $70 per barrel. The maximum price that a few of the consumers are still willing to pay is $100 per barrel of gosum berries. With the price floor at $70 per barrel, consumers buy 300 barrels of gosum berries per month. How much consumer surplus is created with the price floor? Show your calculations. (8 points)

5. After the price floor is instituted, the Chairman of Productions Office buys up any barrels of gosum berries that the producers are not able to sell. With the price floor, the producers sell 300 barrels per month to consumers, but the producers, at this high price floor, produce 700 barrels per month. How much producer surplus is created with the price floor? Show your calculations. (10 points)

6. The Chairman of Production’s Office buys any barrels of gosum berries that the producers are not able to sell. With the price floor, the producers sell 300 barrels per month to consumers, but the producers, at this high price floor, produce 700 barrels per month. How much money does the Chairman of Production’s Office spend on buying up surplus gosum berries? Show your calculations. (10 points)

7. The Emperor of Gondwanaland must collect taxes from the people to pay for the purchases of surplus gosum berries by the Chairman of Production’s Office. As a result, total surplus (producer plus consumer) is reduced by the amount the Chairman of Production’s Office spent on buying surplus gosum berries. Using your answers for problems 4, 5, and 6 above, what is the total surplus when there is a price floor? Show your calculations. (12 points)

8. How does this compare to the total surplus without a price floor from problem 3 above? Is it more, or less, and by how much? (12 points)

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References:

Page 5 of 5

Homework 6

Hint.pdf