Radhika has started providing tutorial service to 10th standard students in mathematics. She charges Rs.750 per week for teaching mathematics to one student. She teaches 10 students every week. Let her weekly total cost be Rs.8000, of which Rs.1000 is fixed cost. Answer the following questions assuming Radhika's tutorial service to be a profit-maximizing competitive firm.How much profit is Radhika making in the short run?Will Radhika operate in the short run? Explain.Demonstrate Radhika's profit maximizing behaviour in a graph. Label your graph clearlyThere are 1000 ice cream sellers in your city with free entry and exit. Assume that each seller has an identical cost structure which remains unaffected by entry or exit of firms. Suppose the city municipal corporation decides to restrict the number of ice cream sellers to 800.How does it affect an individual ice cream seller existing in the market in the short run? Explain with graphs of the market and the individual firmWhat happens in the long run? Explain graphically.In the market for steel pots for boiling water, the supply curve is the typical upward-sloping straight line, and the demand curve is the typical downward-sloping straight line. The equilibrium quantity in the market for steel pots is 200 per month when there is no tax. The government imposes a tax of Rs.5 per steel vessel. As a result, the government is able to raise Rs.800 per month in tax revenue.Please, specify new equilibrium quantity of steel pots (after tax)Draw a graph to show the new and old equilibrium quantity and the tax revenue (before and after-tax)Suppose you are told that the equilibrium price was Rs.100 when the tax was not imposed. With the tax now the buyer pays Rs.103 and the seller receives Rs.98. What is the loss in consumer and producer surplus? Show it on the graph.What is the loss in welfare? Explain.e You advise the government that instead of a tax on steel pots they should impose the tax on the steel industry to minimize the welfare loss. Given that the supply of steel is more inelastic than the supply of steel pots, should the government listen to you. Explain. You can use graph(s) to help with your explanation. Supratim costlessly invents a chemical for hair transplant and since no one else knows the method of preparing the chemical, he reserves the right of being the only seller of the chemical in the market. Supratim has 0 economic cost of producing any quantity of the chemical. He faces a downward sloping demand curve for the chemical (lower the price higher the quantity demanded). i. Show the profit eamed by the monopolist in a graph. given that MC=AVC=AC=0Supratim soon realizes that he can get to know a person's willingness to pay. Will he want to charge the same price from all buyers? Explain.The government asks Supratim to reveal his secret formula and hence many sellers can potentially enter the market. Also assume that due to some input market change, now the average cost of producing the chemical is U-shaped. Customers however have a preference for variety: color of the chemical, whether the chemical is in powder or liquid form, the name of the product, etc.

Given : Revenue per week per student = Rs 750 Total weekly cost = Rs 8000 Revenue for 10 students…

Answered: Radhika has started providing tutorial…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1. Radhika has started providing tutorial service to 10th standard students in mathematics. She charges Rs.750 per week for teaching mathematics to one student. She teaches 10 students every week. Let her weekly total cost be Rs.8000, of which Rs.1000 is fixed cost. Answer the following questions assuming Radhika's tutorial service to be a profit-maximizing competitive firm.
2. How much profit is Radhika making in the short run?
3. Will Radhika operate in the short run? Explain.
4. Demonstrate Radhika's profit maximizing behaviour in a graph. Label your graph clearly
5. There are 1000 ice cream sellers in your city with free entry and exit. Assume that each seller has an identical cost structure which remains unaffected by entry or exit of firms. Suppose the city municipal corporation decides to restrict the number of ice cream sellers to 800.
6. How does it affect an individual ice cream seller existing in the market in the short run? Explain with graphs of the market and the individual firm
7. What happens in the long run? Explain graphically.
8. In the market for steel pots for boiling water, the supply curve is the typical upward-sloping straight line, and the demand curve is the typical downward-sloping straight line. The equilibrium quantity in the market for steel pots is 200 per month when there is no tax. The government imposes a tax of Rs.5 per steel vessel. As a result, the government is able to raise Rs.800 per month in tax revenue.
9. Please, specify new equilibrium quantity of steel pots (after tax)
10. Draw a graph to show the new and old equilibrium quantity and the tax revenue (before and after-tax)
11. Suppose you are told that the equilibrium price was Rs.100 when the tax was not imposed. With the tax now the buyer pays Rs.103 and the seller receives Rs.98. What is the loss in consumer and producer surplus? Show it on the graph.
12. What is the loss in welfare? Explain.
e You advise the government that instead of a tax on steel pots they should impose the tax on the steel industry to minimize the welfare loss. Given that the supply of steel is more inelastic than the supply of steel pots, should the government listen to you. Explain. You can use graph(s) to help with your explanation.
1. Supratim costlessly invents a chemical for hair transplant and since no one else knows the method of preparing the chemical, he reserves the right of being the only seller of the chemical in the market. Supratim has 0 economic cost of producing any quantity of the chemical. He faces a downward sloping demand curve for the chemical (lower the price higher the quantity demanded)
. i. Show the profit eamed by the monopolist in a graph. given that MC=AVC=AC=0
1. Supratim soon realizes that he can get to know a person's willingness to pay. Will he want to charge the same price from all buyers? Explain.
2. The government asks Supratim to reveal his secret formula and hence many sellers can potentially enter the market. Also assume that due to some input market change, now the average cost of producing the chemical is U-shaped. Customers however have a preference for variety: color of the chemical, whether the chemical is in powder or liquid form, the name of the product, etc.

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