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In the town of Rochester, widgets are sold by a competitive industry at an equilibrium price of $12 apiece. One day the city simultaneously imposes a price ceiling of $7 per widget and a sales tax of $5 per widget.

Use a graph to illustrate the amount that consumers must pay, in price plus tax plus the value of waiting time, to acquire a widget.
Use your graph to illustrate the total value of time spent waiting for widgets.
Use your graph to illustrate the gains and losses to all relevant groups, and to show the deadweight loss.
In the town of Rochester, widgets are sold by a competitive industry at an equilibrium price of $12 apiece. One day the city simultaneously imposes a price ceiling of $7 per widget and a sales tax of $5 per widget.
Why might leasing a new Porsche be a good investment for an aspiring Hollywood film producer, even if he can’t easily afford the monthly payments?
1. Complete the following table (fill all the empty cells):

Total output Fixed cost Variable cost Total cost Marginal cost Average fixed cost

0 $0
1 $10
2 $18 $5
3 $23
4
find average vairable and total cost also.
How would you expect the introduction of Uber to affect the market for traditional taxi services?
Consider a perfectly competitive market in the short run, assume that the demand curve is given as shown below. P=100-4Q, also you are told that the total cost is given as TC=50+4Q+2Q^2 and the marginal cost MC=4+4Q. How many firms are in the industry in the short run?
A demand function is given as Qx=500-2Px+10Y+3Py where Qx=Quantity demanded for x goods
Px=Price of X goods
Py=Price of Y goods
Y=Income of consumer
Find price elasticity of demand at price 50
Find income elasticity of demand at price 1000
Find cross elasticity of demand of Y goods at price 40
3. In the January 17, 2004 issue of The Economist, the following statement was made:

“Nor is a fall in the unemployment rate, from 5.9% in November to a 14 month low of 5.7%, much consolation. Most of the fall was accounted for by people leaving the labour force altogether.”

Explain how this decline in the measured unemployment occurred. Why was the decrease in unemployment not much consolation?
2. The (total) cost function is given by C = 50 + 60Q – 18Q2 + 2Q3
i. Draw a graph to illustrate AC, AVC, and MC functions for quantities Q on the interval between 1 and 10. Make sure you show (put the numbers there) where exactly the MC curve intercepts AVC and AC curves.
j. If the price is P = 60, calculate the profit-maximizing firm’s profit.
2. The (total) cost function is given by C = 50 + 60Q – 18Q2 + 2Q3
a. Write down the fixed cost function FC(Q).
b. Write down the variable cost function VC(Q).
c. Write down the marginal cost function MC(Q).
d. Write down the average fixed cost function AFC(Q).
e. Write down the average variable cost function AVC(Q).
f. Write down the average total cost function AC(Q).
g. Find the break-even point (Q and AC).
h. Find the shut-down point (Q and AVC).
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