Princess Mae H.

Vacio BSA 1

1. An organization that is achieving public interest only such as non profit organization. These
organizations only aim a certain goal that do not generate profit and basically most of them are
organization that help the public for free or should I say more on volunteerism. They collect
donations and give it to the people that was in need based on the VMGO that they have set.

2. Firms achieve maximum profits when marginal revenue MR is equal to marginal cost MC, that is when
the cost of producing one more unit of a good or service is exactly equal to the revenue derived from selling
one extra unit
3.

A two-part tariff is a pricing scheme where a producer charges a flat fee for the right to purchase units of a
good or service and then charges an additional per-unit price for the good or service itself. One common
model for a two-part tariff is to set the per-unit price equal to marginal cost and then set the entry fee equal
to the amount of consumer surplus that consuming at the per-unit price generates. The producer will set
price equal to Pc (named as such for a reason that will become clear) and the consumer will buy Qc units.
The producer will capture the producer surplus labeled as PS in shaded part from the unit sales, and the
producer will capture the producer surplus labeled as PS in none shaded part from the fixed up-front fee.

4. Asymmetric information is a barrier in the transactions it’s either hidden actions or hidden
characteristics. When one party observed the advantage or the disadvantage of the transactions but not
observed the other party, it might cause a problem. For example when a car has an airbag and this was
being commercialized so basically many people who know that they are bad at driving they will select a car
that has an airbag and that is an example of adverse selection. But there is also a consumer that when they
know that they had a protection then they are more likely to be a reckless driver which result to increase the
accidents with the involvement of the car that has an airbag and this is an example of moral hazard. There
are both private and government solutions of this problem, government inspect the businesses to ensure
consumer’s safety in buying the products and also firm’s work under the protocol that was given to them by
the government.
5. Quotas and tariffs are the way of government to restrict the trade in a country. The quotas are way of
government to control the imports in the country in order to protect the local products consumption by the
nation. These two implementations by the government help domestic goods to still be recognized in the
market and make a higher demand than the foreign because the foreign products are expensive and limited
due to the quotas and tariffs.