(a). What is the equilibrium price of corn? (b). What is the amount of corn boug
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Question
(a). What is the equilibrium price of corn? (b). What is the amount of corn bought and sold in equilibrium? 3·T!e graph below shows the effects of hurricanes Charley, Frances, and Jeanne on the price and number of boxes of Florida oranges bought and sold per year. Consider the linear demand curve for oranges in the graph. E 2.35Fr 150 242 Boxes per year (millions) (a). What is the demand function? (b). What is the elasticity of demand at a price of $2.35 per box? (c). What is the elasticity of demand at a price of $3.49 per box? (d). At what price will the total expenditure on oranges be largest? Chapter 3. Balancing Benefits and Costs I. Suppose you can hire a mechanic to work on your car for an integer number of hours for up to six hours. The total benefits and total costs are shown in Table 1. What is your best choice?Explanation / Answer
(Chapter 3, Question 1)
Choice is optimal when Marginal benefit (MB) equals Marginal cost (MC), where
MB = Change in total benefit / Change in number of hours
MB = Change in total cost / Change in number of hours
From above table, value of MC and MB are closest when MB = 375 and MC = 365. Therefore, this is the optimal MB and MC, for 4 hours, which is the best choice.
Hours Total Benefit Total Cost MB MC 0 0 0 1 615 125 615 125 2 1,150 330 535 205 3 1,600 615 450 285 4 1,975 980 375 365 5 2,270 1,425 295 445 6 2,485 1,950 215 525Related Questions
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