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a) State and explain Arrow’s Impossibility Theorem and its implications for social choice.
b) State and explain the First and Second Welfare Theorem and discuss their economic implication and significance.
c) Explain the concept of minimum efficient scale and its relevance for determining when a market is likely to become a
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- a) Draw a standard S & D graph for a competitive market. It will be the basis for a series of competitive market questions. b) Below, redraw your graph from (a). Suppose the government decides to subsidize the suppliers by directly giving producers a payment of s for each unit they produce. Add this subsidy to your graph. Highlight/shade the new equilibrium levels of price, quantity, CS, and PS. Shade any inefficiency area. c) Below, redraw your graph from (a). Now suppose there’s a 2nd source of demand in the form of a foreign demand curve DF. Add DF to your graph below, determine the new total demand curve, determine the new equilibrium, and show how the new equilibrium quantity is divided between domestic and foreign buyers.Recently, the price of fuel has increased in Bangladesh. At the same time the Government of Bangladesh has been allowing several producers to start car production in Bangladesh. Assume, the effect of fuel price increase is lower that that from increased number of car producers. (a) Discuss the possible effects on the equilibrium price and equilibrium quantity in the car market. (b) Graphically explain if the quantity is not reached at the equilibrium, total surplus will not be maximum.Define, explain and provide an example from your life for each of the following concepts (if you prefer, you can draw graphs to illustrate your explanations): a) Opportunity cost b) Marginal benefit, marginal cost c) The law of demand, the law of supply d) The law of diminishing marginal utility e) Deadweight loss
- 3-1 Competitive Markets True or False (Why): In a competitive market, buyers and sellers have significant market power. 3-2 Demand What is the difference between an individual demand curve and a market demand curve? If the price of zucchini increases, causing the demand for yellow squash to rise, what do we call the relationship between zucchini and yellow squash? If plane travel is a normal good and bus travel is an inferior good, what will happen to the demand curves for plane and bus travel if incomes increase? What would be the effects of each of the following on the demand for hamburger in Hilo, Hawaii? In each case, identify the responsible determinant of demand. a) The price of chicken falls. b) The price of hamburger buns doubles. c) Scientists find that eating hamburger prolongs life. d) The population of Hilo doubles. 3-3 Supply What is the reason that a supply curve is positively sloped? If the price of corn rose, a) What would be the effect on the supply of corn? b)…The horizontal axis of a graph that shows a market demand curve indicates the: a) Number of consumers who are in the market for this product. b) Various quantities of output at which the market will be cleared. c) Different prices at which various levels of output can be sold. d) Quantities which consumers will be willing and able to buy at various price.Question 1 Consider a rice farmer planting two (2) types of rice, white and brown rice, concurrently in his rice field using the same resources and technology and harvesting them at the same time. Given that consumers like to mix both white and brown rice in their daily consumption, explain the effect on the white rice market when the price of brown rice increases. Support your answers with suitable white rice market diagrams. Consider a farmer that produces both white and brown rice. It is discovered that the demand for brown rice is relatively more inelastic compared to the demand for white rice. Initially the price of both white and brown rice is the same and the farmer produces the same quantity of white and brown rice. Now there is an improvement in agricultural technologies that affect both white and brown rice equally. Employ the demand and supply model to compare and contrast the effects on the equilibrium price and quantity of both white and brown rice…
- Two of the most fundamental findings in welfare economics describe the relationship between markets and Pareto-efficiency. What are these findings? What are the conditions of Pareto-efficiency that competitive economies satisfy? What is the significance of these results for the discipline of Public Economics? With DIAGRAM (400-500 words)Define, explain and provide an example for each of the following concepts: a) Opportunity cost b) Marginal cost c) Marginal benefit d) The law of demand e) The law of diminishing marginal utilitya) Suppose that the market for the return of ready meals from restaurants in a city serves as a free competition market.As a result of many people choosing to move out of the city, demand for this type of services has fallen.At the same time, several new players have established themselves as providers of the service.Discuss the impact on the market equilibrium of these changes in demand and supply, and use a chart to illustrate the reasoning. b) Define the concepts of consumer surplus, producer surplus and socio-economic surplus. Use a diagram to illustrate the concepts of a free competition market. c) Explaining what is meant by the free competition equilibrium is socioeconomically effective.
- How is the market demand curve determined? by subtracting the individual demands curves from the supply curve by horizontally summing the individual demand curves by vertically summing the individual demand curves by averaging all the individual demand curvesUse the following information to answer the next six questions. The accompanying graph depicts the demand (D) curve for general admission concert tickets to see ECON-Jammin', the world's first economics rock band, which is scheduled to visit your city next month. The concert venue can accommodate 100 fans with a marginal cost (MC) of $10 per person. Price $50 $40 $30 $20 $10 0 10 20 MR 30 40 D MC 50 60 Quantity ECON-Jammin' has recently discovered that its fans are made up of two distinct groups that can be easily distinguished. The band has decided to utilize its economic knowledge and offer a high-priced ticket of $40 per person and a low-priced ticket of $20 per person. Based on this information, what is the gain in profit from using price discrimination versus a single-price model? O a. $150 O b. $100 O c. $0 O d. $50 O e. $200a) Assume that the market for home transport of ready-made food from restaurants in a city functions as one free competition market. As a result, many have chosen to move out of the city the demand for this type of services fell. At the same time, several new players have established themselves as providers of the service. Discuss the impact on the market equilibrium of these changes in demand and supply, and use a diagram to illustrate the reasoning. b) Define the terms consumer surplus, producer surplus and socio-economic profit. Use a diagram to illustrate the concepts in a free competition market. Page 3 c) Explain what is meant by the free competition equilibrium is socio-economic efficient.
