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ECO 112 Written Assignment 2 Problem

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Question;1. There are four consumers willing to pay the following amount for haircuts:Jerry: $7 Oprah: $2 Sally Jessy $8 Montel $5There are four haircutting firms with the following costs:Firm A: $3 Firm B: $6 Firm C: $4 Firm D: $2Graphically, the demand and supply curve look like:(a) each firm can produce only one haircut. For efficiency, the equilibrium price for haircuts should be between ____________ and _________________(Hint: a deal can be made only if a consumer is willing to pay a price higher than the cost of producing that good)(b) given answer of (a), consumer(s)_______________________________________ should not have hair-cut.(c) Suppose the equilibrium price for haircuts is $4.5. Then the consumer surplus for Montel equals _______________(d) Suppose the equilibrium price for haircuts is $4.5. Then the producer surplus for Firm A equals _______________(e) given answer of (a), the maximum possible total surplus equals

 

Paper#56748 | Written in 18-Jul-2015

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