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assume that the government decides toreduce spending and taxes and so G = T = 274.16. What value mustthe central bank set for M in order to keep the price levelconstant following the government down
suppose that a researcher discovers that a measure of the total amount of debt in the U.S economy over the past 20 years was a better predictor of inflation and the business cycle than M1 or M2.
If the price of good x fell to $1, what is the new optimal choice Explain what happens to the optimal choice as income increases. What is fundamentally different about the optimal choice when income
Assume your research staff used regression analysis to estimate the industry demand curve for Product X.Qx = 10,000 - 100 Px + 0.5 Y - 1000 r (3,000) (20) (0.3) (105)
A man wishes to set aside money for his daughter's college education. His goal is to have a bank savings account containing an amount equivalent to $20,000 in today's dollars at the girl's 18th birt
Where Qx is the quantity demanded of Product X, Px is the price of X, Y is income, and r is the prime interest rate (given in decimals, e.g., 0.02 or 0.05) The standard error of each estimated coeff
suppose that the cost of raw material used in the production of this good increases (assume nothing else has changed). Draw a diagram comparing the effect of the increase in the cost of materials in
A small company expects to produce 8,000 items in the upcoming year. The current material cost is $5.25 each. 14 minutes of direct labor are required per unit. Workers are paid $7.50 per hour. 2,133
An industry consists of two firms with identical costs C(q) = 5q +q2=2. The firms can either collude or compete. If both collude, they each produce qm (half the monopoly output Qm). If one rm collud
Once again, assume Cournot competition in an industry in which market demand is described by P = 260 - 2Q and in which each firm has a marginal cost of 20. However, instead of two firms, let there now
Return again to the cartel in Problems 4 and 5. Now suppose that the market game repeated indefinitely. What is the discount factor (sigma) is necessary now in order to maintain the collusive agreem
Suppose that two firms compete in quantities (Cournot) in a market in which demand is described by P = 260 - 2Q. Each firm incurs no fixed costs but has a constant marginal cost of 20. Suppose that
Suppose that two firms compete in quantities (Cournot) in a market in which demand is described by P = 260 - 2Q. Each firm incurs no fixed costs but has a constant marginal cost of 20. a. What is th
The other, smaller manufacturers set their price based on that established by Big Steel. Discuss how Big Steel should use the information on the supply of steel by other, smaller competitors when it
Assume your research staff used regression analysis to estimate the industry demand curve for Product X. Where Qx is the quantity demanded of Product X, Px is the price of X, Y is income, and r is the
Assume Firm Y's production function is given by the following Cobb Douglas equation: Q = 0.5 x L0.6 x K0.5 where L denotes labor and K denotes capital. a. Does the production function exhibit increasi
The local economists estimate that Y is equal to $12,000 and Monopoly has set Pc at $10. If Monopoly's MC of serving another customer is equal to $1, what is the profit maximizing price for seasonal
A thousand dollars is invested for 7 months at an interest rate of 1% per month. What is the nominal interest rate What is the effective interest rate
The Haverford Company is considering three types of plants to make a particular electronic device. Plant A is much more highly automated than plant B, which in turn is more highly automated than pla
Alpha and Beta, two tiny islands off the east coast of Tricoli, produce pearls and pineapples. The following production possibilities schedules describe in their potential output in tons per years.
Suppose that every driver faces 1% probability of an automobile accident every year. An accident will, on average, cost each driver $10,000. Suppose there are two types of individuals: those with $6
find the optimal level of pollution as recommended, we need to set total marginal cost = 0, then I have 2 + 2P -3 = 0 => 2P -1 = 0 => P = 0.5 You have already evaluated MCP = 2 + 2P and MCC = -3
A 10 year series of $10,000 annual deposits is followed by 10 more annual deposits of $20,000, which is followed by 20 more years at $30,000 per year. For the total 40 year period, calculate the equ
A successful engineer wants to fund an endowment for a university which will pay $10,000, $15,000, $20,000, and $25,000 for the 1st, 2nd, 3rd, and 4th quarters respectively, each year, forever. For
A foundry is fully equipped for $650,000. It is expected to earn $85,000 annually for 15 years without any salvage value. Due to changing market conditions, the foundry is sold for $100,000 after 8