# Fully Essay

BECN 100
Take-Home Assignment

Due on July 15, 2010
• You can complete this assignment as a group of up to 5 students.
• Total available mark for this assignment is 40.
• I will not accept any late assignments.

PART I (32 Marks)

1. A recent study found that the demand and supply schedules for Frisbees are as follows: (6 Marks)

Price per Frisbee Quantity Demanded Quantity Supplied
(\$)             (million) (million)
11 1 15
10 2 12
9 4 9
8 6 6
7 8 3
6 10 1

a) What are the equilibrium price and quantity of Frisbees?

b) Frisbee manufacturers persuade the government that Frisbee production improves scientists’ understanding of aerodynamics and thus is important for national security. A concerned Parliament votes to impose a price floor \$2 above the equilibrium price. What is the new market price? How many Frisbees are sold?

c) Irate students march on Ottawa and demand a reduction in the price of Frisbees. An even more concerned Parliament votes to repeal the price floor and impose a price ceiling \$1 below the former price floor. What is the new market price? How many Frisbees are sold?

2. Use the following table to answer this question.

Price Units of Output Total Cost
(dollars) (quantity demanded) (dollars)
10 200 2,000
9 260 2,275
8 325 2,550
7 405 2,825
6 480 3,100

The demand and total cost schedules of a monopolist are presented in the table above. What price should a profit-maximizing monopolist charge? (4 Marks)

3. Consider the following table of long-run total cost for three different firms: (4 Marks)

Quantity 1 2 3 4 5 6 7

Firm A 60 70 80 90 100 110 120

Firm B 11 24 39 56 75 96 119

Firm C 21 34 49 66 85 106 129

Does each of these firms experience economies of scale or diseconomies of scale?

4. Your roommate’s long hours in Chem lab finally paid off-she...