Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

help please? What is supply curve if you know the total cost curve is TC(q) = 250q? I am confused on what to do Assume

help please? What is supply curve if you know the total cost curve is TC(q) = 250q? I am confused on what to do

image text in transcribed
Assume that there are many, many rms that sell mobile phones, and assume that the rms' products are perfect substitutes, so that the supply of mobile phones can be characterized as perfect competition. Potential buyers are heterogenous in their valuation for mobile phones and each potential buyer consumes at most 1 mobile phone. Suppose that there are 1000 agents with a positive willingness to pay for a phone. These willingness to pays are uniformly distributed between 1 and 1000. Hence, someone has willingness to pay 1000, someone has willingness to pay 999, someone has willingness to pay 998,..., someone has willingness to pay 2, and someone has willingness to pay 1 for a mobilephone.. Assume that every rm's total cost curve is given by TC (q) = 250q, where q is the amount produced by the rm. Furthermore, assume that the rms have no xed costs. a) Draw the demand curve (approximately). b) Draw the market supply curve. C) Suppose now that the government imposes a 100 dollar tax on mobile phones. How much tax revenueas measured in dollarswill the government get in total? 01) How largeas measured in dollarsis the welfare loss from the tax in (c)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Price theory and applications

Authors: Steven E landsburg

8th edition

538746459, 1133008321, 780538746458, 9781133008323, 978-0538746458

More Books

Students also viewed these Economics questions

Question

What strategy and techniques is Frank using on Don?

Answered: 1 week ago