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Describe how the Federal Reserve can affect the money supply and interest rates.
An asset cost $120 today. you will hold it for one year then sell it. there is a 25% chance that it will be worth $100 in a year, 25% chance it will be $115 in a year and a 75% chance it will be worth
In spite of the fact that firms do not make payments on resources they own, these resources still have an opportunity cost. How is this possible, and
If the yed for a product is equal to one , is it a basic or a luxury good? If ?Qd% does not change , what does it mean for the Yed?
The Fed earns enough revenue so that it never has to grovel before a congressional appropriations committee for funding. What purpose is served by this fact?
Describe how households and businesses are slowing down the circular flows of money and goods and services during the economic slump.
Solve the following storage problem under perfect competition. Provide the prices and quantities in each period with optimal storage and compare the net present value to a no storage scenario (use a d
What happens after a firm (private limited liability company) has gone bankrupt and is no longer in existence but after some time decides to go back when they have raised enough capital to continue th
Why might a perfectly competitive firm continue to produce in the short run, even though the market price is less than its average total cost?
Fred owns four fishing boats on Seneca Lake. He knows from experience the following information about the catch per boat depending on the total numbers of boats he sends to either the north or south e
Suppose a firm’s input of capital is fixed at K = 5 . The cost of capital is r = 2. Derive the formulas for and plot the AFC, MC, AVC, and SAC curves if the short run total cost function is:
Consider the following events: Scientists reveal that consumption of oranges decreases the risk of diabetes and at the same time farmers use a new fertilizer that makes orange trees more productive.
At a price of $40, what output level would the firm produce? What would its profits be
Calculate the elasticity of demand and elasticity of supply; what do you conclude from these answers
Analyze why the prices of gasoline rose so high over the summer. Was it because OPEC cut back production and the number of people driving was more? Illustrate this using a graph showing a decrease in
With a beta equal to .85 and a risk-free rate of 5%, if the required return on Navistar, Inc. is equal to 9%, what is the required return on the market, rM , assuming the market is in equilibrium?
Huntsman International’s stock has a beta of 1.23, its required return is 11.75%, and the risk-free rate is 4.30%. What is the required rate of return on the stock market? (Hint: First find the
What is the maximum amount that the money supply can increase when $1,000 cash is injected into a banking system with a 20-percent reserve requirement? Give two reasons why this maximum may not be rea
Assume that the federal government increases spending on public works programs, such as highway construction, by $40 billion. How does this change in spending affect the aggregate demand curve? Explai
Having a 100% crime free society is not likely to be attainable. Why? Do you agree or disagree? Make your case, whether you agree or disagree, by using the tools of economics of crime prevention.
If the market for unskilled labor is highly competitive, what would a minimum wage legislation do to their level of employment? What remedies do you propose if the market fails to provide adequate inc
Using the tools of demand and supply analysis, illustrate the impact of rent control on the market for housing in a free market economy. Would a voucher system of housing subsidy for the poor or low i
It is rumored that the Swiss government subsidizes cattle farming and that the subsidy is larger in areas with more tourist attractions. Can you think of a reason this policy might be efficient?
What are some economic, social, and political reasons that make economic growth important to a nation? How could a population increase contribute to economic growth, and how could it hinder growth?
If the price of one good changes, what part of the change in demand is due to the substitution effect, and what part is due to the income effect?