Clearly solve the following questions.,,,
3. The market illustrated below has inverse demand p(Q) = 130 - 30 and industry-wide marginal cost MC(Q) = 10 + 2Q. If production is competitive, this is the market (inverse) supply curve. If production is consolidated under a monopolist, this is the monopolist's MC curve. a. Suppose there is a monopolist. Explain how marginal revenue for a monopolist is different than for a firm under perfect competition. Then derive the profit-maximizing market outcome (including the monopoly price and quantity Qm and Pm). b. Now suppose the market operates under perfect competition, but with a per-unit tax t = $30. Determine the market equilibrium and illustrate on a diagram. As a follow-up, determine the relationship Q(T) that gives the equilibrium market quantity as a function of the tax rate. c. If you invert the relationship from part (b), you have T(Q), the tax the government would need to set if it wishes the market quantity to be Q. Then total tax revenue is T(Q) = T(Q) . Q. [This may be useful for the intuition that's requested below.] Determine whether total welfare in this market is higher (i) under a monopoly, or (ii) under perfect competition with an "empire-building" government that maximizes total tax revenue T(Q). For (ii), make the usual assumption that tax revenue is spent on something useful (i.e., not wasted). Illustrate both cases on a single diagram. Do your best to explain why your comparison turns out as it does. [ Applying intuition about the components of marginal revenue MR(Q) to the "marginal tax revenue" T'(Q) might be helpful.] P p(Q) = 130 - 3Q MC(Q) = 10 + 2Q (S(p) = 2p-5)1. What are at least two reasons why a country might trade with another country? Explain your answer by listing specific examples of countries and products that would back up your reasons. 2. Who is made better off from the specific trading you have suggested in the above answer? 3. (Read question 3 & 4 before answering 3) Please draw two graphs assuming there is no trading occuring: One showing our domestic market for a good you chose in question 1 and one showing the world market for that same good making sure to label each completely. Show me where the consumer and producer surpluses are. 4. I am going to assume that there is a difference between the US domestic price and the world price for that good. (If you have not shown a difference please make sure that you do before continuing with this question) Show me what will happen if the US trades with other countries. 5. Given your above graph, will the US be an importer or exporter of the good you have chosen? 6. Notwithstanding your answer to question 2, there are parties that are affected by trade who may not be involved in the transaction. Who are the winners and who are the losers if trading takes place? 7. Are there reasons that either the US government or other governments might not like the outcome or be very happy about the outcome you have described in question 6? Name 2 on each side and explain. 8. What might governments of either side do to address their dismay or happiness in the outcome? Name one action that the government might choose on each side. 9. Draw a graph of the result of tariffs on the domestic market for the good you chose. 10. Draw a graph of a good with a negative externality. Explain what the externality is and if the result is too much or too little production. carl Name 3 ways. And explain.TeSuit IS TOO much Of 11. How can the externality be addressed. Name 3 ways. And explain. 12. Draw a graph of a good with a positive externality and explain whether the result is too much or not enough production. 13. How can the externality be addressed. Name two ways and explain. 14. There are some solutions that are theoretically possible but not realistic for solving externalities. Why do they fail in practice? 15. Explain what a specific example of a public good is and who takes advantage(abuses/defrauds) of them, how/why? 16. Explain what a specific common resource is and who takes advantage (abuses/defrauds) of them, how/why? 17. What could be done to correct question 15? 18. What could be done to correct question 16? 19. Economics may be a study of scarcity, but it is also a study of equity as well. Would you be happy with the solutions you put forward in questions 17 & 18? Why or why not? 20. Who pays their fair share of taxes?(this is a trick question) explain 21. Who pays their unfair share of taxes? (this is also a trick question) explain 22. Explain how at least three different types of taxes discriminate against some groups and are fair or unfair as we have chosen to implement them in the United States. 23. Why have we chosen to set taxes up this way do you think? 24. What are implicit and explicit costs? 25. Why does the production function's slope decrease? 26. Why does the average fixed cost curve decrease as output increases? 27. When do firms decide to shut down in the short or long term? Why is their decision different? 28. Why are Monopolies a concern for society? What can they do that would lead to a sub- optimal outcome? 29. What has been done to remedy a monopoly and do you think there are any monopolies today that need to be addressed?2. The table below shows the aggregate claim amounts (in units of 2100, 000) for an insurer's household portfolio for the past 3 years across 3 different regions of the UK. Region (i) 2015 2016 2017 100 90 110 70 80 90 130 125 114 Using Empirical Bayes Credibility Theory (EBCT) model 1 calculate the credibility factor and hence calculate the EBCT premium for each region in year 2018. [8 marks ]
