Microeconomics

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The writer can either write the assignment by hand and then take a photo of it or type. it will be easier to write by hand because the assignment includes several graphs. A. Consumer Surplus from Drinking Beer Jasmine and Leonard are EC 120 students who regularly get together at a bar for beer Friday after class. The table shows their Friday marginal benefit (MB) schedules for beer, with marginal benefit measured as “number of dollars per beer.” The price of a beer is $5. Jasmine and Leonard each buy two beers. A1. Compute Jasmine’s consumer surplus. Make sure you state exactly how consumer surplus is measured—not just a number, a number of something. In purchasing two beers, is Jasmine behaving rationally or irrationally? Explain your answer. A2. Compute Leonard’s consumer surplus. Make sure you state exactly how consumer surplus is measured—not just a number, a number of something. In purchasing two beers, is Leonard behaving rationally or irrationally? Explain your answer. B. Market Demand for McDonald’s Hamburgers What happens to the market demand for McDonald’s hamburgers when ______? B1. McDonald’s reduces the price of its hamburgers, while the price of Burger King’s hamburgers remains unchanged. B2. Burger King increases the price of its hamburgers, while the price of McDonald’s hamburgers is unchanged. B3. Scientific studies show that eating hamburgers increases the risk of cancer comparable to tobacco use. These are three questions, each presenting a change in the demand environment for McDonald’s hamburgers. The assumption of “ceteris paribus” (other things being equal) is made in each case. For each question, you should begin by drawing a typical market demand curve for McDonald’s hamburgers. For each question, you must both explain your answer verbally and illustrate your answer graphically. Label the axes of your graph and label or otherwise identify the curve(s) in your graph. If you use abbreviations, state what the abbreviations mean. Each question is independent of the others and assumes “other things being equal.” For each of B1, B2, B3, your answer should include the following statements: (a) the demand curve to which the result pertains (it is: “the demand curve for McDonald’s hamburgers”). (b) whether the result involves “a movement along” the demand curve or “a shift in” the demand curve. (c) specification of the direction of the “movement along” or “shift.” (d) why the “moving along” or “shift” occurs.

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