Project #196165 - MicroEconomics

Business Tutors

Subject Business
Due By (Pacific Time) 08/11/2017 08:00 am

1. Barbara left an $80,000 / year job as an architect to run a catering business out of her house. To do this she needs to kick out a roommate that was renting a room from her for $12,000 / year. Barbara spends $10,000 per catering job on employee salaries and supplies. She also must pay $54,000 annually on insurance regardless of how many jobs she does. Barbara earns $20,000 per job.

a. How many catering jobs must Barbara get in order to earn an accounting profit?

b. How many catering jobs must Barbara get in order to earn an economic profit? 

 

2. Would it be hard or easy for a gardener working in both poor and wealthy neighborhoods to price discriminate? Analyze the three necessary conditions to answer.

 

3. If supply rises and demand falls what happens to price and quantity?

 

4. Are there any advantages of an earned income tax credit (EITC) over a minimum wage in terms of raising incomes for low income families? Comment on both policies as you clearly illustrate relative differences.

5. It is Valentine’s day. Supply is perfectly inelastic at 20,000 roses available for sale in Cupertino. Quantity demanded is represented by the equation: Qd = 25,000 – 100 P (where P is the price in $). a.

a.Calculate the equilibrium price algebraically (show work)

b. Show in S&D diagram

 

 

 

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