ECON 213 PROBLEM SET 3 Complete Solution
Problem Set 3
Name: ________________________________________
Problem Set 3 is to be completed by 11:59 p.m. (ET) on Monday of Module/Week 6.
Price of crackers |
Quantity Demanded (per month) |
$3 |
80 |
$2.5 |
120 |
$2 |
160 |
$1.5 |
200 |
$1 |
240 |
$1.00 - $1.50: ___________________________________
$1.50 - $2.00: ___________________________________
$2.00 - $2.50: ___________________________________
$2.50 - $3.00: ___________________________________
If the price of graham crackers is $2.50 should firms raise or lower their prices if they want to increase revenue? Explain this in terms of elasticity.
Profit maximizing output: _______________________
Approximate mark up over cost _______________________
In the long run, the price falls to $7.50. Why does this happen?
What is the new profit maximizing output? _______________________
PRICE = $0.50 per bottle
Bottles of glue |
Total Utility (Utils) |
1 |
15 |
2 |
23 |
3 |
30 |
4 |
35 |
5 |
38 |
6 |
40.5 |
PRICE = $2.00 per bale
Bales of hay |
Total Utility (Utils) |
1 |
10 |
2 |
22 |
3 |
36 |
4 |
52 |
5 |
70 |
6 |
90 |
Bottles of glue: _________________________
Bales of hay: ____________________________
ECON 213 PROBLEM SET 3 Complete Solution
$1.00 - $1.50: _________=(.5)/(240-200)*( 200+240)/( 1+1.5) = ...
A+ - Thank you!
Thanks for the positive feedback!