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What is a budget constraint? How does a budget constraint explain consumer choices when used in conjunction with indifference curves? Explain what happens if a household looses half of their income, u
Studies indicate that the price elasticity of demand for cigarettes is about -0.4.If a pack of cigarettes currently costs $2.0 and the government wants to reduce smoking by 20%, by how much should it
Suppose that an individual with income I cares about two goods, X and Y. The price of the two goods is Px and Py. The individual has the following utility function:
If the price of a good increases by 8% and the quantity demanded decreases by 12%, what is the price elasticity of demand?is it elastic, inelastic or unitary elastic?
If the cost function for John's Shoe Repair is C(q) = 100+10q-q^2+(1/3)q^3, what is the firm's marginal cost function? What is its profit maximizing condition if the market price is p? What is its sup
Assume the only choice variable is x. The total benefit function is B(x) =170x - x2 and the cost function is C(x) = 100 - 10x + 2x2
GDP does not include the value of used goods that are resold. Why would including such transactions make GDP a less informative measure of economic well-being?
The government purchases component of GDP does not include spending on transfer payments such as Social Security. Thinking about the definition of GDP, explain why transfer payments are excluded.
Give some examples of how firms in the pure monopoly or near pure monopoly business structure are able to increase profits through price discrimination.
At the profit maximizing outputrate, what are the monopolist's average total cost and averagerevenue?
Assume that the reserve requirement is 5%. All other things equal, will the money supply expand more if the Federal Reserve busy $2,000 worth of bonds or if someone deposits in a bank $2,000 that he h
It is May 1. You have just bought $2000 worth of furniture. You will pay for it in 24 equal monthly payments starting at the end of May next year. Interest is 6% nominal per year, compounded monthly.
Suppose foreigners spend $7 billion on U.S exports in a specific year and Americans spend $5 billion on imports from abroad in the same year, what is the amount of the United States net exports?
The demand for illegal drugs is inelastic. Much of the expenditure on illegal drugs comes from crime. Assuming these statements to be correct, What is the most effective way of decreasing the quantity
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?