The first mate of the Spanish fleet approaches Crusoe with a list in hand. He knows that Crusoe is a mystery economist and a financial wizard, so he does not even try to bargain. On the other hand, Crusoe, out of respect for the competitive market he "worships," he does not take advantage of the monopolistic situation. Taking goat for example, Crusoe is willing to sell goat at the following schedule (assuming linear functional form): 100 From his perfect knowledge of the Spanish fleet, he derives the following demand schedule (assuming linear functional form): . Quantity 0 1 C: P = 66 D: P = 66.5 1 2 1 Price 19 21 23 100 If both parties (Crusoe and the Spanish) are strictly following their own schedule, then: Question 2.1: What is the market equilibrium price and quantity? A: P = 158 Q=69.5 B: P = 159 Q=70 C: P = 160 D: P = 161 Q = 70.5 Q=71 219 Quantity Price 0 442 1 438 2 434 42 However, the captain does not want to spend too much money on goats, so he restricts the first mate to buy at the maximum of 150 pieces of silver; then: Question 2.2: What is the new market equilibrium quantity? A: P = 65 B: P = 65.5

The first mate of the Spanish fleet approaches Crusoe with a list in hand. He knows that Crusoe is a mystery economist and a financial wizard, so he does not even try to bargain. On the other hand, Crusoe, out of respect for the competitive market he "worships," he does not take advantage of the monopolistic situation. Taking goat for example, Crusoe is willing to sell goat at the following schedule (assuming linear functional form): 100 From his perfect knowledge of the Spanish fleet, he derives the following demand schedule (assuming linear functional form): . Quantity 0 1 C: P = 66 D: P = 66.5 1 2 1 Price 19 21 23 100 If both parties (Crusoe and the Spanish) are strictly following their own schedule, then: Question 2.1: What is the market equilibrium price and quantity? A: P = 158 Q=69.5 B: P = 159 Q=70 C: P = 160 D: P = 161 Q = 70.5 Q=71 219 Quantity Price 0 442 1 438 2 434 42 However, the captain does not want to spend too much money on goats, so he restricts the first mate to buy at the maximum of 150 pieces of silver; then: Question 2.2: What is the new market equilibrium quantity? A: P = 65 B: P = 65.5

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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