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Original post by alex_hk90
Surely you just consider the producer's optimisation problem:
max Profit(P, Q, TC(Q)) w.r.t. (P, Q)
so sub TC and P into Profit(P, Q, TC(Q)): max Profit(Q) w.r.t. Q
where Profit(Q) = (80 - 0.5Q)Q - (30 + 30Q + 0.5Q^2) = -30 + 50Q - Q^2
then just find FOC(Q) and solve for Q


Can't thank you enough, you're always so helpful :smile:

Just one more question I've become stuck on though...

Suppose that all individuals are identical and their monthly demand for cable tv access can be represented by p=5-0.5q, where p is price in pounds per hour and q is hours per month. The firm faces constant marginal cost of $1. The profit maximising two part tariff would yield what amount of total revenue?
Original post by PopABottle
Just one more question I've become stuck on though...

Suppose that all individuals are identical and their monthly demand for cable tv access can be represented by p=5-0.5q, where p is price in pounds per hour and q is hours per month. The firm faces constant marginal cost of $1. The profit maximising two part tariff would yield what amount of total revenue?

What is a "two part tariff"? If you solve it out the normal way I get: p = 3, q = 4, TR = 12, Profit = 8. But I'm guessing there's something more to this by the way the question is phrased.
Original post by alex_hk90
What is a "two part tariff"? If you solve it out the normal way I get: p = 3, q = 4, TR = 12, Profit = 8. But I'm guessing there's something more to this by the way the question is phrased.


I'm not sure haha

That's why I asked. Thanks for the help though :smile:
A two part-tariff is a pricing system which looks to extract as much consumer surplus as possible. The total payment made by a consumer is of a form t = F+pq where F is a lump-sum fee tagged along to the usual (price x quantity) payment.

It has been a long time since I've touched this so I'd get a second opinion but -- intuitively, you have a constrained optimisation problem: Let t = total payment by consumers. Choose t,q to maximise t-q such that consumer surplus=0.
Original post by PopABottle
I'm not sure haha

That's why I asked. Thanks for the help though :smile:


Original post by Overmars
A two part-tariff is a pricing system which looks to extract as much consumer surplus as possible. The total payment made by a consumer is of a form t = F+pq where F is a lump-sum fee tagged along to the usual (price x quantity) payment.

It has been a long time since I've touched this so I'd get a second opinion but -- intuitively, you have a constrained optimisation problem: Let t = total payment by consumers. Choose t,q to maximise t-q such that consumer surplus=0.


Hmm, I thought it might be that but have never had to do any of those kind of questions so can't really help.
Reply 2125
econ question jan 08.jpg

please help with this question!! i can't seem to figure out how to do the maths :/
Original post by Chat-G
econ question jan 08.jpg

please help with this question!! i can't seem to figure out how to do the maths :/


Draw out the diagram then it becomes easy. Essentially you shift Qs up by £10 to get Qs_tax then look for Qd=Qs_tax.
Reply 2127
Original post by alex_hk90

Original post by alex_hk90
Draw out the diagram then it becomes easy. Essentially you shift Qs up by £10 to get Qs_tax then look for Qd=Qs_tax.


okay i'll try thanks
Can anyone tell me how to draw the appropriate diagrams to show a 'positive out gap' and a 'negative output gap', or point me in the direction of the diagrmas online (clear diagrams please). By the way this is for AQA unit 2 Economics.
Reply 2129
Could someone please explain balance of payments and it's link to exchange rates to me, please? It's the one thing I can't understand at all, and my exam (AQA Economics unit two) is getting closer. Thanks to anyone who can help. :smile:
Original post by Plonk
Could someone please explain balance of payments and it's link to exchange rates to me, please? It's the one thing I can't understand at all, and my exam (AQA Economics unit two) is getting closer. Thanks to anyone who can help. :smile:


As exchange rates rise the pound has more value. This means imports become relatively cheaper for us and exports become less competitive internationally.

This will reduce the current account on the balance of payments, as it is exports minus imports (very simplistically, lots of other things aswell) and it could lead to a current account deficit (seen in lots of developed countries).

Hope this helps!
Reply 2131
Hey sorry to bother, can anyone answer the following as best as possible please?

What are the advantages and disadvantages of:

A direct tax
An indirect tax

(it's for A levels)

Thanks!
Reply 2132
Original post by thefunktopus69
As exchange rates rise the pound has more value. This means imports become relatively cheaper for us and exports become less competitive internationally.

This will reduce the current account on the balance of payments, as it is exports minus imports (very simplistically, lots of other things aswell) and it could lead to a current account deficit (seen in lots of developed countries).

Hope this helps!


That does help, but can I ask what causes exchange rates to rise and fall (interest rates are a factor, non?) and what impact that all has for the UK economy? Sorry, I have an awful micro teacher and I'm having to self-teach a lot.
Original post by Plonk
That does help, but can I ask what causes exchange rates to rise and fall (interest rates are a factor, non?) and what impact that all has for the UK economy? Sorry, I have an awful micro teacher and I'm having to self-teach a lot.


No problem, but I should probably tell you that this stuff is macro (although the diagram for exchange rates is micro).

Exchange rates change with:
Interest rates, as they rise speculators will buy pounds to take advantage of the higher rate, increasing the ex. rate (and vice versa)

There are also other factors, for example if a country has an increase in productivity it can produce goods cheaper, therefore foreigners want to buy them and buy pounds, increase the ex. rate.

Impact? Not really sure, can't reasearch it now as have micro and statistics exams within 10 hours so time is a VERY finite resource!

Goodl luck!
Hey TSRians,
I have a question for everyone, how does operation of market forces eliminate excess demand and supply?
I can't seem to explain it :frown:
Reply 2135
Hi guys,

Does a perfectly competitive labour market take into account the total net advantages of an occupation?

Do wage differentials exist because in the real world people take into account the total net advantages of a job? In such a situation, are wages lower in jobs where the non-monetary factors are higher and vice-versa?

How do total net advantages affect the supply of labour in the short run and the long run?

Answers to any of these questions would be greatly appreciated
Really not a fan of this topic atm

Thanks.
Hi guys,

Do any of you have a key terms (definitions) Word documents or anything along those lines? For AQA Economics Unit 2...? I really need it badly, as exam is in 2 days!

Regards
Kingboom4
Reply 2137
Can occupational and geographical immobility of labour be a cause for Frictional and Structural unemployment, if so how come Frictional is voluntary and Structural not?
Hey, can anybody explain the connection/link between stationarity and autocorrelation? Thanks.
Hi, I am trying to draw a macroeconomic diagram showing how the use of supply-side policies and monetary policy will affect the UK economy - an outwards shift of both aggregate demand and aggregate supply. However, I don't know what to draw as the initial starting position as cost-push inflation is high suggesting an AD curve on the point of full employment (on the straight part of the LRAS curve) but there is also high unemployment suggesting the opposite of an AD curve far away from the full employment part of the LRAS curve!

Does anyone have any suggestions of how to draw the diagram? Please please help! :smile:

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