c. {2 points) {fproclice makesped'eel'. do suppb; cone siope up? As Adam Smith had predicted, most production processes. are characterized by learning by doing with increasing ei'l'icieuezrIr over time and with the experience. In the production of libertyr ships during 1|Worm War II, for example {see the graph to the left), the labor required to build a ship fell by as much as two thirds over less than from years because experience allowed workers and engineers to become better at building ships and to figure out better ways to organize production. i. Draw a marginal cost curve for a rm 1where productity increases with output. Does the supply curve slope up? 2. (4 points) Moving Equilibrium. Show the effect of each on the monopoly market equilibrium; you don't need to have exact answers but explain the direction of change in the demand and/or marginal cost curves. a. (1 point) Everyone gets a $2000 check from the government for Covid relief and they all want to spend it on restaurant eating. (Safely socially distanced with take-home contactless, masked delivery service.) b. (1 point) The Trump Supreme Court majority strikes down minimum wage laws as infringements on the "right to contract" and wages fall in Amherst. C. (1 point) Shortage of beans raises the cost of ingredients to make Cassoulet d. (1 point) Economic development raises rents in Amherst. 3. (6 points) Social supply and demand a. (2 points) Does the community demand curve slope down? Even with diminishing marginal utility for the individual, the community demand curve may not be downward sloping. People may conclude that Beyonce's cassoulet is good because others are eating in her restaurant (information). People may enjoy eating in the restaurant only if other people are there (network effects). People may value her restaurant more because it is expensive (status effects). i. Draw a demand curve for her restaurant under assumptions of information, network effects, status effects. Do you still have a downward sloping demand curve? Do you necessarily have an equilibrium price and quantity where demand equals marginal cost? ii. If demand curves slope up, will there be an equilibrium between supply and demand? b. (2 points) Can a perfectly competitive business survive? Before a single plane was built, Boeing spent as much as $50 billion on the 787 Dreamliner. Planes can then be made at relatively low cost. i. If Boeing sells planes at marginal cost, will it be able to recoup its investment? ii. If companies that invest in fixed costs LAVE. cannot survive, can we have a productive ANA economy?15 points Recall Beyonce from PS1. Reuse the tables you produced there based on: Serving MU Cassoulet Total Workers 1 $30.00 0.30 2 $27.90 0.6. 3 $25.95 1.04 4 $24.13 1.50 5 $22.44 2.02 6 $20.87 2.6 7 $19.41 3.32 8 $18.05 4.12 9 $16.79 5.04 10 $15.61 5.09 1. (5 points) Monopoly and equilibrium a. (2 points) Beyonce gets smart and realizes that she is a monopolist with the only quality bistro around. Calculate the marginal revenue she gets for each additional serving as the change in total revenue (price times sales). Graph this. What is the new quantity of sales and the new price? b. (1 point) Shade in the entire area of consumer surplus on your monopoly graph. Shade in the entire area of producer surplus. c. (2 points) Estimate consumer and producer surplus under perfect competition and under monopoly. What is the dollar value of each, and of total social surplus? Which is better for consumers? Which is better for producers? Which is better for society? Explain