Problem 1
A good can be produced in a competitive industry at a cost of \(\$ 10\) per unit. There are 100 consumers are each willing to pay \(\$ 12\) each to consume a single unit of the good (additional units have no value to them.) What is the equilibrium price and quantity sold? The government imposes a tax of \(\$ 1\) on the good. What is the dead weight loss of this tax?
Problem 2
Suppose that the demand curve is given by \(D(p)=10-p .\) What is the gross benefit from consuming 6 units of the good?
Problem 2
Suppose that the demand curve is given by D(p) = 10 ? p. What is the gross benefit from consuming 6 units of the good?
Problem 4
Suppose that a consumer is consuming 10 units of a discrete good and the price increases from \(\$ 5\) per unit to \(\$ 6 .\) However, after the price change the consumer continues to consume 10 units of the discrete good. What is the loss in the consumer's surplus from this price change?
