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Purchasing Power Parity Theorem (PPPT). The inflation rate in the United States is projected at 3 percent per year. The New Zealand rate is projected to be 5 percent.
Covered Interest Arbitrage. The spot and 360-day forward rates on the Swiss franc are SF 2.1 and SF 1.9, respectively. The risk-free interest rate in the US is 6 percent, and the riskfree rate in Swit
Danny “Dimes” Donahue is a neighborhood’s 9-year old entrepreneur. His most recent venture is selling homemade brownies that he bakes himself. At a price of $1.75 each, he sells 250.
Show how the consumer’s opportunity set changes if income increases by $300. How does the $300 increase in income alter the market rate of substitution between goods X and Y?
Identify at least five locational attributes that are important in the location of a fast-food restaurant. Compare notes with someone in the industry such as a local restaurant manager or owner.
Interest-Rate Parity. If the interest rates on the 30-day instruments in the US and Switzerland are 12 and 10 percent (annualized), respectively, what is the correct price of the 30-day forward SF?
Under the terms of the swap, 6-month LIBOR is exchanged for 12% per annum (compounded semiannually). The average of the bid-offer rate being exchanged for 6-month LIBOR in swaps of all maturities is c
You’ve recently learned that the company where you work is being sold for $275,000. The company’s income statement indicates current profits of $10,000, which have yet to be paid out as di
Critically examine the basic formulations of the harrod- domar model of economic growth. how does the harrod model explain the occurrence of trade cycles?
An agreement reached with the labour union in which wage increases are tied to productivity increases
What are the key points in short run production functions that delineate the three stages of production?Explain the relationship between the law of diminishing return and three stages of production.
All three spend half their time on each activity (C)iv. Larry spends half his time on each activity, while Moeonly washes cars and Curly only mows lawns (D)
"In the Solow model, an economy that starts with a higher stock of capital per capita will reach a higher steady state level of capital per capita"
Show that equation (1) implies that per capita investment is also a constant fraction of per capita income. Which equation, which was not stated in the set up of this question, do you need to show thi
Calculate the profit each firm earns in equilibrium.You are a manager for Herman Miller—a major manufacturer of office furniture. You recently hired an economist to work with engineering and ope
1. Consider a one-year discount bond that pays $2,000 one year from now. If the rate of discount is 3 percent, calculate the present value of the bond.
Describe how free market features could be introduced to help alleviate the problem
Draw the decision tree for this problem without the probability values
Assume that Mf = Ma. Find the real wage that makes total labor supply and total labor demand exactly equal to each other (this is called, the equilibrium real wage). Find the equilibrium number of hou
The inverse market demand in a homogeneous-product Cournot duopoly is P = 100 – 2(Q1 + Q2) and costs are C1(Q1) = 12Q1 and C2(Q2) = 20Q2.
The Einstein Bagel Corp. offers a frequent buyer program whereby a consumer receives a stamp each time she purchases one dozen bagels for $5. After a consumer accrues 10 stamps, she receives one dozen
The accompanying graph (top of next page) summarizes the demand and costs for a firm that operates in a perfectly competitive market.
Consider now the decision problem of the agents. Let n denote the number of hours per month that an agent works. Write an equation relating n and l. Write the agents budget constraint. Express the bud
Suppose that the total benefit and total cost from an activity are, respectively, given by the following equations: B(Q) = 150 + 28Q – 5Q2 and C(Q) = 100 + 8Q. (Note: MB(Q) = 28 – 10Q and
Suppose that the Government introduces a labor tax: for each hour of labor hired, the firm needs to pay to the Government. Find the new optimal demand for labor. Is it higher or lower than in the ab