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ECO601 module 3 homework




Question;Use the following hypothetical demand schedule for movies;to do exercises 1?4.;Quantity;Demanded Price Elasticity;100;$ 5;80 $10;60 $15;40;$20;20 $25;10;$30;1. a. Determine the price elasticity of demand at each quantity;demanded using the arc or midpoint formula: Percentage change in quantity;demanded?(Q2_Q1)/Q;1divided;by percentage change in price?(P2_P1)/P1.;b. Redo exercise 1a using price changes of $10 rather than $5.;2. Plot the price and quantity data given in the demand schedule;of exercise 1. Put price on the vertical axis and quantity on the horizontal;axis. Indicate the price elasticity value at each quantity demanded. Explain;why the elasticity value gets smaller as;you move down the demand curve.;3. What would a 10 percent increase in the price of movie;tickets mean for the quantity demanded of a movie theater if the price;elasticity of demand was 0.1, 0.5, 1.0, and 5.0?;4. Using the demand curve plotted in exercise 1, illustrate what;would occur if the income elasticity of demand was 0.05 and income rose by 10;percent. If the income elasticity of demand was 3.0 and income rose by 10;percent, what would occur?;8. To increase marginal utility, you must decrease consumption;(everything else held constant). This statement is correct, even though it;sounds strange. Explain why.;9. Suppose that the marginal utility of good A is 4 times the;marginal utility of good B, but the price of good A is only 2 times the price;of good B. Is this point consumer equilibrium? If not, what will occur?;13. What is the purpose of the two fields of study, neuro-economics;and behavioral economics? Why might people tend to be overconfident?;1. Use the following information to determine;the total fixed costs, total variable costs, average fixed costs, average;variable costs, average total costs, and marginal costs.;Total Output;Costs;TFC;TVC;AFC;AVC;ATC;MC;0;$100;1;$150;2;$225;3;$230;4;$300;5;$400;2. Use the following table to answer the;questions listed below.;a. Calculate the total fixed costs, total variable costs;average fixed costs, average variable costs, average total costs, and marginal;costs.;Total Output;Cost;TFC;TVC;AFC;AVC;ATC;MC;0;$20;10;$;40;20;$;60;30;$;90;40;$120;50;$180;60;$280;b. Plot each of the cost curves.;c. At what quantity of output does marginal cost equal average;total cost and average variable cost?;3. Using the table in exercise 1, explain what happens toATCwhenMC>ATC,MC;


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