Economics:Demand curve,accounting profit etc.

Problem 1

The following is a demand schedule for shoes:
Price: $100 $80 $60 $40 $20
Quantity: 10 14 18 22 26
a. Illustrate the demand curve.
b. How much will consumers spend on shoes at a price of $80?
c. As price drops from $100 to $80, is the demand elastic or inelastic? Show your work or reasoning.

Problem 2

Advertisers convince people that to be stylish they need twice as many shoes.
a. Redraw the demand curve.
b. How much will consumers now spend on shoes at a price of $80?
c. As price drops from $100 to $80, how does elasticity change as opposed to problem 1? Why?

Problem 3

How large of a tax-induced price increase would it take to reduce cigarette consumption by 20 percent? Show your work.

Problem 4

Identify three goods each for which your demand is (a) elastic and (b) inelastic. What accounts for the difference of elasticity? Explain thoroughly.

Problem 5

Complete the following table. What is the value of fixed cost?
Rate of Output Total Cost Marginal Cost Average Total Cost
0 $100
1 110
2 130
3 165
4 220
5 300

Problem 6

On a graph, depict marginal cost and average total cost using the data from problem 5. Indicate minimum average total cost on the graph.

Problem 7

Suppose a company incurs the following costs:
Labor $400
Equipment $300
Materials $100
It owns the building so it doesn't have to pay the $800 in rent.
a. What is the total accounting cost?
b. What is the total economic cost?
c. Explain why these are different in this way.

Problem 8

Consider the marginal cost for a product like Windows XP. How does the marginal cost for a product like this differ from a product like automobiles? What relevance might there be to this difference?