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The demand for illegal drugs is inelastic. Much of the expenditure on illegal drugs comes from crime. Assuming these statements to be correct, What will happen to the amount of crime?
How will a successful campaign that decreases the supply of drugs influence the price of drugs and the amount spent on them?
A firm produces according to the following production function: Q=k^.5L^.5 where q= units of output, k= units of capital, and L= units of labor. suppose that in the short run k=100. moreover, wage of
Advanced MUa = z=10-x and MUb = z = 21 - 2y, where z in marginal utility per dollar in the amount spent on product A, and y is the amount spent on product B.
What is outsourcing? Give examples of outsourcing in the manufacturing and services industries. Explain the examples. What is the difference between outsourcing and off shoring?
where L is labor, K is capital, and N is land. In this economy the factors of production are in fixed supply with L = 100, K = 100, and N = 100.
Suppose velocity is constant, the growth rate of real GDP is 3% per year, and the growth rate of money is 5% per year. Calculate the long- run rate of inflation according to the quantity theory in eac
Quinton needs a new refrigerator. He has two choices a basic one, or a more efficient one from Energy Star. He earns 4% compounded annually on his investments, he wants to consider a 10-year planning
Suppose that a company is considering building a new factory to increase their productive capacity. If they had planned to borrow the funding in the bond market, how would an increase in interest rate
Survey the monetary policies adopted by the Federal Reserve Board since the countries financial crisis erupted in 2008. How will these policy steps affect the nation’s employment, inflation, rea
When the price of paper increases from $100 to $120 per ton, the quantity supplied increases from 200 to 210 tons per day. The price elasticity of supply is?
Many people believe that Congress will eventually have to reduce Social Security benefits in order to reduce the budget deficit. Although most of the changes would not take place until later, assume f
In this economy, compute private saving, public saving, and national saving
Suppose the price elasticity of demand for vanity plates in your state is 0.60. The initial price is $20 and the initial quantity is 1,000 plates per week. Suppose the state increases the prices by 10
Assume Px = 5, Py = 2 and Income =540. If a consumer has a MVx = 2x/y, is it possible for her to achieve an interior solution? If so, what is the solution? If not, why not?
Suppose that the unemployment rate is 6.5% and current-dollar GDP is $1,45 billion. Using Okun’s Law, what would be the potential GDP number corresponding to a natural unemployment rate of 5.5%?
Suppose that in 1984 the total output in a single-good economy was 10,000 buckets of chicken and the price of each bucket of chicken was $10. In 2005 the price per bucket of chicken was $20 and 22,000
How does the amount of unemployment created by an increase in the minimum wage depend on the elasticity of labor demand? Do you think an increase in the minimum wage will have a greater unemployment e
Discuss the rationale for government regulation of firms with market power. Is regulation in the consumer’s interest or in the producer’s interest and how might this control special intere
Some workers in the economy are paid a flat salary and some are paid by commission. Which of compensation scheme would require more monitoring by supervisors? In which case do firms have an incentive
Suppose government spending increases. Would the effect on aggregate demand be larger if the Federal Reserve held the money supply constant in response or if the Fed were committed to maintaining a fi
Consider a two good exchange economy with two individuals, A and B. A’s preference is represented by UA = 0.3 lnxa1 + 0.7 lnxa2 and B’s is represented by UB = .8lnxB1 + .2lnxb2. A’s
Consider two countries, Canada and China. Canada has comparative advantage in oil production, and China in shoes production. Suppose China grows biased to oil production.
If imports of Brazilian ethanol begin to rise sharply in the future, what do you predict will happen to the size of the import tariff levied on this good?
Suppose a freeze in Florida wipes out 20% of the apple crop. How will this affect the equilibrium price and quantity of pear? Assume that the apple and pear are substitute to each other.