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General Equilibrium

Several questions

1. The idea that markets adjust rapidly enough to eliminate profit opportunities immediately is called________ a. perfect information. b. market manipulation. c. market efficiency. d. market foolishness. e. amateurs running the market. 2. Seeking to own stocks of different kinds in many mark

Price ceiling

The government has set price ceiling on "whatever the product is", so that there is a shortage. That industry complains to the government that the ceiling price is far below the equilibrium price. The issues would be quality sold = quality bought, the amount customers are prepared to buy at the ceiling price Qd, is significantly

Move towards Equilibrium

Assume a competitive industry long-run equilibrium firm's industry earning normal profits. Now assume that production technology improves such that average total costs decline by $5 a unit. Describe the process this industry will go through as it moves to long term equilibrium.


(a)Suppose a decrease in consumers' incomes causes a decrease in the demand for chicken and an increase in the demand for potatoes. Which good is inferior and which is normal? Explain your reasons. (b)How will the equilibrium price and quantity change for each good?

Microeconomic issue

Consists of performing application-oriented exercises wherein the specific economic principles learned in this course are put to practical use. You must translate your ideas into economic analysis using the specific economic theory and economic terms. Choose of one topical microeconomic issue out of two possible alternatives

Surplus Ideas: Consumer surplus, Producer surplus

Use the ideas of consumer surplus and producer surplus to explain why economists say competitive markets are efficient. Why are below- or above-equilibrium levels of output inefficient, according to these two sets of ideas?

Short run, total cost

1.In the model of monopolistic competition, there can be short-run a. losses or profits but there must be profits in long-run equilibrium. b. profits but there must be losses in long-run equilibrium. c. losses or profits but there must be losses in long-run equilibrium. d. losses or profits but there must be neither profit


5. Nintendo and Sony Playstation are each planning to introduce one new game into the market. Each is considering three different kinds of games: an urban action game like Grand Theft Auto, an adventure game like Tomb Raiders, or a strategy game like SimCity The table shows each firm's profits (Sony's profit first) in millions o

Revenue Maximization and Shut Down Decisions for a Video Store

Please see chart attached and respond the following questions: a. If the owner of this video store wants to maximize profits, how many DVD's should the store rent per day and what price should be charged? explain your answer b. Should it continue to produce in the short run? Why? c. How much are fixed costs? d. H

Game Theory Question: Walmart and Target

** Please see the attached file for the complete problem description ** Suppose that Wal-Mart and Target are independently deciding whether to stick with bar codes or switch to RFID tags to monitor the flow of products. Because many suppliers sell to both Wal-Mart and Target, it is much less costly for suppliers to use one s

Shifts in demand and supply curves

A market is in equilibrium with quantity Q* and price P*. a. What happens to P* if there is an increase in supply? b. What happens to Q* if there is a decrease in supply and a decrease in demand? c. What happens to P* if there is an increase in demand followed by a decrease in supply followed by another increase in d

Supply and Demand Curves

Please refer attached file for graph. Use the accompanying graph, which shows the marginal cost and average total cost curves for the store Zapateria, a perfectly competitive firm. a.How many pairs of shoes will Zapateria produce if the market price of shoes id $70 a pair? b.What is the total profit Zapateria produce if t

Statements with Help of Suitable Concepts in Microeconomics

Suppose a friend tells you that her Economics instructor made two seemingly contradictory statements to the class. The statements were 1. "The quantity demanded of a good varies inversely with its price" and 2."A rise in demand will lead to a rise in price, all other things being equal." Knowing that this instructor could never

Shifts in supply and demand..

3. Given the following data, identify the amount of shortage or surplus that would exist at a price of (a) $5.00 _____________ (b) $3.00 _____________ (c) $1.00 _____________ A. Price $5.00 $4.00 $3.00 $2.00 $1.00 $5.00 $4.00 $3.00 $2.00 $1.00 B. Quantity demanded C. Quantity supplied Al 1 2 3 4

Demand and supply shifts

1) How will the following situations impact the helicopter tour business? Using the Demand and Supply model anpredict what could happen to the demand/supply curves and to equilibrium price. Include the curves in your response. a.The impact on the business in the event of real incomes decrease(ceteris paribus). b.The impa

Determining Equilibrium output and profits

2 companies produce the same item. The companies each determine their own output and the combined output of the two is sold at the market price. Company A has controls its costs better than its competitor, B. The demand curve is P=280-2(Q1+Q2) and the cost function is C1(Q1)=3Q1 and C2(Q2)=2Q2 Find out the followings 1

Supply and Demand

Draw supply and demand diagrams for market A for each of the following. Use these diagrams to determine how each of the following changes in demand and/or supply affect equilibrium price and equilibrium quantity. ( This is a competitive market.) Your answer should state whether price and quantity rise, fall, or remain unchange

the effect on the marginal propensity to spend

Question 1 Consider the following information about the demand for goods and services. All variables are in billions of dollars. Consumption Function: C = 1000 + 0.9 YD Investment Demand: I = 1400 Government Purchases: G = 1500 Taxes: Ta = 1000 + 0.15 Y Transfer Payments: Tr = 1100 Exports

Short answer questions of types of goods, supply and demand

1. A ------------ ----------- is a legal maximum price above which a commodity cannot be sold. 2. Cars and gasoline are a good example of-----------(complements, inferior goods, substitutes) 3. The law of ---------- states that the quantity demanded is inversely to price. 4. If the demand for a good falls whe

Equilibrium rate of return using APT

1. Suppose the market can be described by the following three sources of systematic risk with associated risk premiums. Factor Risk Premium Industrial production (I) 7% Interest rates ( R) 3 Consumer confidence ( C) 5 The return on a particular stock is generated according to the following equation:

Movement and shifts of demand curve, changes in supply/demand

Please explain in detail the difference between a movement along and shift of the demand curve. Show the impact on the equilibrium price and quantity that results from (1) an increase in demand (2) an increase in supply (3) an increase in both supply and demand Please provide an example of the role of supply and

Assume that you have the following open economy where C = 10 + 0.8(Y-T); I = 10; G = 10; T = 10 and imports and exports are given by IM = 0.3Y and X = 0.3Y* respectively where Y* is foreign output.

Assume that you have the following open economy where C = 10 + 0.8(Y-T); I = 10; G = 10; T = 10 and imports and exports are given by IM = 0.3Y and X = 0.3Y* respectively where Y* is foreign output. Then solve for the equilibrium output in the domestic economy given Y*. What is the multiplier effect for this open economy? What h

Basic Characteristics of Market Structures

1. List the basic characteristics of pure monopoly, monopolistic competition and oligopoly. Under which of these market classifications does each of the following most accurately fit? (a) a supermarket in your hometown; (b) the steel industry; (c) a Kansas wheat farm; (d) the commercial bank in which you or your family has an ac


If the price level doubles, aggregate expenditures will? In the multiplier model, if the mpe is x, then the multiplier is? The multiplier model assumes that the price level is? The multiplier equals? If an increase in income of $125 causes aggregate expenditure to increase from $1,250 to $1350, then the marginal pr

The IS and LM Curve

Derive the LM curve by one of the standard methods used in Macroeconomics. Be sure to label all axis and curves on your graph. Explain in writing to what your derivation brings equilibrium and how it accomplishes this. Derive the IS curve by one of the standard methods used in Macroeconomics. Explain in writing to what marke

ECONOMICS: Equilibrium Interest Rate

Assume that the officials in Ecoland have compiled the following information about their economy for last year: Y = 10,000 C = 6,000 T = 1,500 G = 1,700 The government uses the following equation for the investment function: I = 3,300 - 100r Where r = equal to Ecoland's real interest rate. Calculate, then expl

Game Theory practice questions

Practice Exam Faculty of Continuing Education Economics August 18, 2008 1. This game involves two roommates. Each of them has 2 hours that can be devoted either to preparing a common meal or to studying. The payoff to person i, (where i = 1; 2), to hours spent studying, Si, is given in the table on the left below. T

The change in equilibrium output

1- You are given the following information on the macroeconomy: Consumption: 200 + 0.75 Y Investment: 100 + 0.10 Y Government Spending: 500 Exports 100 Imports 50 + 0.25 Y Compute the equilibrium level of income, the

Tax revenue help

Problems attached. No graphs required, simple computations only.