Bundle: Principles of Economics, Loose-leaf Version, 8th + LMS Integrated MindTap Economics, 2 terms (12 months) Printed Access Card
8th Edition
ISBN: 9781337607735
Author: N. Gregory Mankiw
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 7, Problem 8PA
To determine
The equilibrium price and the quantity of haircuts and total surplus.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
Two street vendors (Vendor Y and Vendor Z) with mobile carts produce the same good which they sell at the same price. Customers are located along a linear boardwalk with six locations (Location A through Location F), with a different number of customers in each location, given by the number beneath each letter, as pictured below:
A
B
C
D
E
F
3
4
6
6
8
8
So, there are 3 customers in location A, 4 in B, 6 in C, 6 in D, 8 in E and 8 in F. The vendors simultaneously choose their location, and cannot move once their choice has been made. Customers will make a purchase from whichever vendor is closest to them, and equally close customers will be split evenly between Vendor Y and Vendor Z. The vendors CAN locate in the same location (so, both could locate in location A).
How many customers will Vendor Y capture in equilibrium? (Assume that it is possible to capture half a customer, if necessary).
Ilsia is driving home from work. She needs to buy gas and notices an Exxon-Mobil station on one side of the street and a Shell station on the other side of the street. Although run by different companies, the two stations sell gasoline at the same price.
a. The most likely reason that the price is the same is that
drivers need gas and are willing to pay whatever price a gas station charges.
consumers view gasoline from different gas stations as perfect substitutes.
government regulation requires both gas stations to charge the same price.
gas stations always make a profit, so they can charge any price they want.
b. If one station increases its price,
it will make a higher profit.
it will lose customers to the cheaper station across the street.
it will be fined by the government.
it will sell more gasoline.
A market consists of ten similar suppliers that are making the same supply decisions. To find the market supply of these ten suppliers, you:
SELECT THE CORRECT ANSWER
a.find the average quantity produced by the ten suppliers.
b.take one-tenth of the individual supply of each supplier and add it up.
c.take the individual supply of one supplier.
d.multiply the individual supply of one of the suppliers by ten.
Chapter 7 Solutions
Bundle: Principles of Economics, Loose-leaf Version, 8th + LMS Integrated MindTap Economics, 2 terms (12 months) Printed Access Card
Knowledge Booster
Similar questions
- There are several hamburger shops around you. You are trying to find ways to make your hamburger shop the most successful hamburger shop in your area. What is at least one way you would differentiate your shop from others?arrow_forwardExercise 3.5. Pablo, Dirk and Franz run the only bar in town. Pablo wants to sell as many drinks as possible without losing money. Dirk wants the bar to bring in as much revenue as possible. Franz wants to make the largest possible profits. Using a single diagram of the bar's demand curve and its cost curves, show the price and quantity combinations favoured by each of the three partners. Explain.arrow_forwardMicroeconomicsarrow_forward
- The widget market is competitive and includes no transaction costs. Five suppliers are willing to sell one widget at the following prices: $34, $24, $14, $12, and $10 (one seller at each price). Five buyers are willing to buy one widget at the following prices: $10, $12, $14, $24, and $34 (one buyer at each price). For each price shown in the following table, use the given information to enter the quantity demanded and quantity supplied. Price ($ per widget) Quantity Demanded (widgets) $10 $12 $14 $24 $34 In this market, the equilibrium price will be Quantity Supplied (widgets) 3 2 4 0 5 1 per widget, and the equilibrium quantity will be widgets.arrow_forwardThe widget market is competitive and includes no transaction costs. Five suppliers are willing to sell one widget at the following prices: $30, $20, $10, $5, and $3 (one seller at each price). Five buyers are willing to buy one widget at the following prices: $10, $20, $30, $38, and $44 (one buyer at each price). For each price shown in the following table, use the given information to enter the quantity demanded and quantity supplied. Quantity Demanded Quantity Supplied (widgets) Price ($ per widget) $3 $5 $10 $20 $30 $38 $44 (widgets)arrow_forwardThe widget market is competitive and includes no transaction costs. Five suppliers are willing to sell one widget at the following prices: $20, $12, $8, $4, and $2 (one seller at each price). Five buyers are willing to buy one widget at the following prices: $8, $12, $20, $32, and $44 (one buyer at each price). For each price shown in the following table, use the given information to enter the quantity demanded and quantity supplied. Price Quantity Demanded Quantity Supplied ($ per widget) (widgets) (widgets) $2 $4 $8 $12 $20 $32 $44 In this market, the equilibrium price will be______ per widget, and the equilibrium quantity will be ___ (#) widgets.arrow_forward
- Businesses often advertise that they sell "directly from the factory" and thus they "cut out the middleman." the implication of these claims is that businesses can then sell to consumers at lower prices, because they don't have to add in the costs of the middleman. Does "cutting out the middleman" actually lead to lower prices for consumers? Explain why or why not.arrow_forwardSuppose that the fish processor could use a different production method that involves recycling water. This would reduce the pollution in the lake to levels safe for recreation, and the water park would no longer be affected. If the fish processor uses the recycling method, then the fish processor's economic profit is $1,000 per week, and the water park's economic profit is $2,600 per week. If the fish processor does not use the recycling method, then the fish processor's economic profit is $1,700 per week, and the water park's economic profit is $1,500 per week. These figures are summarized in the following table. Complete the following table by computing the total profit (the fish processor's economic profit and the water park's economic profit combined) with and without recycling. Action Profit Fish Processor Water Park Total (Dollars) (Dollars) (Dollars) No Recycling 1,700 1,500 Recycling 1,000 2,600 Total economic profit is…arrow_forwardSuppose that the fish processor could use a different production method that involves recycling water. This would reduce the pollution in the lake to levels safe for recreation, and the water park would no longer be affected. If the fish processor uses the recycling method, then the fish processor's economic profit is $1,100 per week, and the water park's economic profit is $2,600 per week. If the fish processor does not use the recycling method, then the fish processor's economic profit is $1,800 per week, and the water park's economic profit is $1,500 per week. These figures are summarized in the following table. Complete the following table by computing the total profit (the fish processor's economic profit and the water park's economic profit combined) with and without recycling. Profit Fish Processor Action (Dollars) Water Park (Dollars) Total (Dollars) No Recycling Recycling 1,800 1,500 1,100 2,600 Total economic profit is highest when the recycling production method is $1,500…arrow_forward
- 09.arrow_forwardThe table below shows the weekly marginal cost (MC) and average total cost (ATC) for Smitten, a perfectly competitive firm that produces children's mittens in a competitive market. Smitten's Production Costs Quantity (pairs of Marginal Cost mittens) 5 10 15 20 25 30 35 40 Costs (dollars) 10 9 Smitten's marginal cost and average total cost curves are shown below. 8 7 5 m 21 (dollars) $1.50 2.00 2 2.50 3.50 4.00 5.00 6.00 8.50 34 Smitten's Costs of Production 5 MC ATC Average Total Cost (dollars) $8.00 5.00 10 15 20 25 30 35 40 45 50 Quantity (pairs of mittens) 4.50 4.00 4.00 4.50 5.00 5.50arrow_forwardd) What will be the market price of repairing a puncture? e) What profit will each company obtain in a day? f) Show with graphs.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Exploring EconomicsEconomicsISBN:9781544336329Author:Robert L. SextonPublisher:SAGE Publications, Inc
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Exploring Economics
Economics
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:SAGE Publications, Inc
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning