1. Although the U. S. airline industry has only a relatively small number of sellers, the market is nevertheless highly competitive. Explain.;2. The price of a taco was $0.29 in 1970 and $0.99 in 1993. The CPI was 38.8 in 1970 and 144.0 in 1993. What is the 1993 price of a taco in 1970 dollars?;3. The price to attend a NBA basketball game in Chicago is $55 while the CPI in Chicago is 153. The CPI in Charlotte is 108 while the price to attend a NBA basketball game is $52. Which city offers a smaller real cost of attending a NBA basketball game?;4. The reward for the capture of Jesse James was $500.00 in 1881. Suppose the CPI in 1881 was 0.25. What is the real value of the reward in 1990 dollars if the CPI was 130.7 in 1990?;Part 2 ? Calculate these! Answer all 5 questions. Each question is worth 15 points (75 points total);5. The inverse demand curve for product X is given by;PX = 25 - 0.005Q + 0.15PY;where PX represents price in dollars per unit, Q represents rate of sales in pounds per week, and PY represents selling price of another product Y in dollars per unit. The inverse supply curve of product X is given by;PX = 5 + 0.004Q;a. Determine the equilibrium price and sales of X. Let PY = $10;b. Determine whether X and Y are substitutes or complements.;6. Suppose that the price of gasoline has risen by 50%. What happens to a consumer's level of utility given he spends some of his income on gasoline?;a. Diagram the impact of the increase in gas prices in a commodity space diagram, and show the relevant indifference curves.;b. Now, if the individual's income rises just enough so that his original consumption bundle exactly exhausts his income, will the individual purchase more or less gasoline (this level of income implies the consumer can afford his original consumption bundle)?;c. Is the individual better-off at the higher price level of gasoline with the higher income level or the original price of gas and income?;7. Natasha derives utility from attending rock concerts (r) and from colas (c) as follows;U(c,r) = c.9r.1;a. What is the marginal utility of cola? What is the marginal utility of rock concerts? What is the marginal rate of substitution?;b. If the price of cola (Pc) is $1 and the price of concert tickets (Pr) is $30 and Natasha's income (I) is $300, how many colas and tickets should Natasha buy to maximize utility?;c. Suppose that the promoters of rock concerts require each fan to buy 4 tickets or none at all. Under this constraint and given the prices and income in (a), how many colas and tickets should Natasha buy to maximize utility?;d. Is Natasha better off under the conditions in (b) or (c)? Explain your answer.;8. Adriana is in charge of setting the price on basketball tickets for the local team?s home games. From previous experience, she has estimated demand to be;P = 50 - 0.00166Q;where P represents price in dollars per seat, and Q represents seats that could be sold per game. The seating capacity is 25,000 seats.;a. Determine the number of tickets that would be sold at a ticket price of $15 each.;b. Also, determine the consumer surplus that could be absorbed from these consumers if Adriana were able to set ticket prices so that each customer (who values the ticket at least at $15) pays the entirety of his or her actual valuation of the ticket.;9. Donald derives utility from only two goods, carrots (Qc) and donuts (Qd). His utility function is as follows;U(Qc,Qd) = QcQd;Donald has an income (I) of $120 and the price of carrots (Pc) and donuts (Pd) are both $1.;a. What is the marginal utility of carrots? What is the marginal utility of donuts? What is the marginal rate of substitution?;b. What is Donald's budget line? (Don?t draw it, just write it!);c. What is Donald's income-consumption curve?? (Don?t draw it, just write it!);d. What quantities of Qc and Qd will maximize Donald's utility?;e. Holding Donald's income and Pd constant at $120 and $1 respectively, what is Donald's demand curve for carrots?;f. Suppose that a tax of $1 per unit is levied on donuts. How will this alter Donald's utility maximizing market basket of goods?
Paper#21211 | Written in 18-Jul-2015Price : $57