Answer the following questions.
A restaurant faces very high demand for its signature mousse desserts in the evening but is less busy during the day. Its manager estimates that inverse demand functions are pe = 30 - Qe in the evening and pd = 16 -Qd during the day, where e and d denote evening and daytime. The marginal cost of producing its dessert evening, MCe, is $8. The marginal cost of producing its dessert daytime, MCd, is $4. There is no fixed cost of producing dessert. Create a spreadsheet with the column headings Qe, Pe, TRe, MRe, TCe, MCe, ne, Qd, Pd, TRd, MRd, TCd, MCd, and nd. (note: ne is profit evening and nd indicates profit daytime) a. What are the optimal prices for the dessert that the restaurant should charge during the evening hours? b. What is the optimal quantity for the dessert that the restaurant should produce during the evening hours? c. What is the total cost of producing the optimal quantity for the dessert during the evening hours? d. What is the maximum profit for the dessert that the restaurant should produce during the evening hours? e. What are the optimal prices for the dessert that the restaurant should charge during the daytime hours? f. What is the optimal quantity for the dessert that the restaurant should produce during the daytime hours? I g. What is the total cost of producing the optimal quantity for the dessert during the daytime hours? h. What is the maximum profit for the dessert that the restaurant should produce during the daytime hours?rnr r'- r" 1.The concept of GDP is used by policy makers for many purposes that include keeping track ofthe growth of our economy and forecasting a recession; but it is also abused by some. Discuss some of the applications of GDP which may be considered improper use or abuse of the concept. 2." Even though the Great Recession ofcially ended, the unemployment rate is still considered high.' Discuss. 3.Discuss how the distribution of income among various groups of income earners have changed in this country during the past 5D years. in your opinion, do we need to initiate any policy to address the distribution of income? Make sure you provide references to anyconclusions you arrive at. 4.Many people feet the Fed, which is largely independent of Congress and the President, is too powerful. In fact, the Chairman of the Fed Board of Governors, Ben Bernanke, has been called the second most powerful person in the country. Do you think the Fed is too powerful? Should Congress have more oversight of the Fed? Share your thoughts. 5."N either monetary policy nor fiscal policy alone can be effective in formulating sound economic policies for recession.' Do you agree or disagree? Share your thoughts. Effou now should realize how important it is for economists to try and predict future conditions of the LLB. economy. Economists are also interested in the performance of the economy at a more local level. Discuss how local and national forecasts play an important role in the State and Federal levels. If here have been significant discussions on the government's scal policy during the Great Recession. in particular, many did not like the government's actions in salvaging the auto industry in providing guaranteed loans to GM and Chrysler. What is your opinion? Provide economic reasons for your opinion. Suppose the demand and supply for milk in the European Union (EU) is given by p = 124 - 0.7Q" and p = 7 + 0.2Q5, where the quantity is in the millions of liters and the price is in cents per liter, Assume that the EU does not import or export milk. (Note: 100 cents = 1 euro.) (a) Find the market equilibrium quantity, Q*, and equilibrium price, p*. millions of liters cents per liter (b) Find the consumer and producer surplus at the market equilibrium. (Round your answers to two decimal places.) consumer surplus million euros producer surplus million euros (c) The European farmers successfully lobby for a price floor of p = 40 cents per liter. What will be the new quantity sold in the market, Q? Q =[ millions of liters (d) Find the new consumer and producer surplus after the price floor. (Round your answers to two decimal places.) consumer surplus million euros producer surplus million euros (e) What is the deadweight loss from the price floor? (Round your answer to two decimal places.) million euros (f) If the EU authorities were to buy the surplus milk from farmers at the price floor of 40 cents per liter, how much would they spend in millions of euros? (Round your answer to two decimal places.) million euros
