1. A study has estimated the effect of changes in interest rates and consumer confidence on the demand for money to be: log M = 14.666 + .021 log C - .036 log r, where M denotes real money balance. C is an index of consumer confidence, and r is the interest rate paid on bank deposits. Based on this study, a 5% increase in inte
Write down the profit expression as function of chosen prices and derive the best response. Find the equilibrium prices and profits.
Suppose that three firms which produce a homogeneous output will compete by choosing prices and the market price P is the minimum of the three prices that are chosen. The market demand is determined by the equation p=12-Q. The first firm has a marginal cost of 2, the second has a marginal cost of 4 and the third has a marginal c
Consider a small city's dry-cleaning market, which is monopolistically competitive. Currently, the typical dry-cleaner is charging $5 an item. The average cost of dry-cleaning is $2. The typical dry-cleaners clean 1,000 items per week. (Each customer drops off approximately 4 items). Suppose, a new dry-cleaner was to enter t
In perfectly competitive market a firm typically has short run average total cost curve and marginal cost curve of: ATC-100+Q+(100/Q) MC=100+2Q 1. Assume the firm faces an output price of $110. How many units of output does firm produce 2. Consider that average total cost is minimized at 10 units of output, what would we
The firm's cost of producing this drug is given by the following function: TC = 100Q Suppose that the U.S. consumers can buy the same drug at Canadian prices over the Internet through Canadian pharmacies. (Assume that shipping costs are zero.) How do I determine the price and profit the drug company will set for its drug n
Assume that GDP (Y) is 5,000. Consumption is C=1,000+.3(Y-T). Investment is I=1500-50r, where r is the real interest rate. Taxes (T) are 1,000 and government expenditures (G) are 1,500. a). Calculate the equilibrium values of C, I, and r. b). Calculate the equilibrium values of private saving, government saving, and tota
The local government in a west Coast college town is concerned about a recent explosion in apartment rental rates for students and other low-income renters. To combat the problem, a proposal has been made to institute rent control that would place a $900 per month ceiling on apartment rental rates. Apartment supply and demand co
16) If demand increases while supply decreases for a particular good: a. its equilibrium price will increase while the quantity of the good produced and sold could increase, decrease, or remain constant. b. the quantity of the good produced and sold will decrease while its equilibrium price could increase, decrease, or remain
Critically discuss that there is no satisfying theory that explains the behaviour of firms in oligopoly markets. Which theories should I include in the analysis? Which examples are relevant to these theories? Furthermore, may you include some journals that will enhance my understanding of the key points that you will include
Suppose the market demand curve in an industry is characterized by P=1-Q, where P is the market price and Q is the total quantity supplied to the market. Suppose there are three firms in this industry. All have a zero marginal cost of production.
Suppose the market demand curve in an industry is characterized by P=1-Q, where P is the market price and Q is the total quantity supplied to the market. Suppose there are three firms in this industry. All have a zero marginal cost of production. 1. In a one-shot interaction, what is the Cournot quantity for each firm? 2.
Suppose that a cake is being divided in the following way among two players. Each player writes down a number from zero to one on his piece of paper. Then both players turn over their pieces of paper. If the sum is less than or equal to one, each player gets a share of the cake equal to the number he wrote. If the sum is bigge
If QD=100-6P and QS=4p I understand how to get the equilibrium of p=10 and Q=40 but I need to find consumer and producer surplus ...how does that get calculated? b) How does the equilibrium change if a price floor of $12 is put in place? Calculate deadweight loss from this price floor. c) Suppose a tax of t=$2 is
I need help on these two microeconomic theory problems dealing with a monopoly marginal cost. See attached file for full problem description.
Reasons why monopolists do not exhibit resource allocative efficiency. Why monopolists cannot obtain any price they wish. Deadweight losses when a firm produces at Q =MC. Social costs of maximizing marginal utility. 1. The perfectly competitive firm exhibits resource allocative efficiency (P=MC), but the single price monopoli
Calculating optimal output and profits and comparing monopoly to perfectly competitive markets. 1. Perfectly Competitive Equilibrium. Bada Bing, Ltd., supplies standard 128 MB-RAM chips to the U.S. computer and electronics industry. Like the output of its compet6itors, Bada Bing's chips must meet strict size, shape, and s
Discuss answers to the following questions: Consider an economy in which: C=100+0.5Y and I=100 - output is equal to income a) Find equilibrium income. b) What is the multiplier for consumption spending for this economy? c) What is the multiplier for investment spending for this economy? d) What is the marginal pro
1) The government will tax a good for various reasons, resulting in a fall in equilibrium quality while the prices rise. Could someone explain how price controls and taxes have influenced your purchasing choices. 2) Give an example of a shift in consumer and producer surplus. How did it affect the market efficiency? Please ex
(See attached file for full problem description) --- 1. Demand Schedule Supply Schedule Price Quantity Demanded/Year Price Quantity Supplied/yr $2.25 12 2.25 30 2 16 2 28 1.75 20 1.75 26 1.5 24 1.5 24 1.25 28 1.25 22 1 32 1 20 a. Plot the supply and demand curves and indicate the equilibri
Using diagrams for both the industry and a representative firm, illustrate competitive long run equilibrium.
Using diagrams for both the industry and a representative firm, illustrate competitive long run equilibrium. Assuming constant costs, employ these diagrams to show how (a) an increase and (b) a decrease in market demand will upset the long-run equilibrium. Trace graphically and describe verbally the adjustment processes by which
Please help to the following questions. Thank you for your assistance. Suppose that inventory growth in the U.S. is unexpectedly high this year. What is likely to happen to output next year, and why? Is the economy currently in equilibrium? Use the Keynesian cross model to explain your answers.
There are two Markets. Both Market A (Athletes) and Market B (Boats) have the same demand curve of Qd = 400 - 20 Pd where Pd is the price consumers pay and Qd is the quantity demanded. Market A has a supply curve of Qsa = 100 + 10Psa where Ps is the price received by suppliers and Qs is the quantity supplied. Market B h
Show the short-run profit maximizing equilibrium graphically for a sports team facing a negatively sloped linear demand with a short-run total cost function (SRTC) of the form: SRTC = TFC + TVC = TFC + α A, where TFC is total fixed cost; TVC is total variable cost; A is attendance and α > 0 is a constant. On your diagr
You are head of the Transportation Department in Kingston evaluating the operation of a light rail line that was previously built (probably in 2050) across Lake Mali. It has operated for long enough to pay back capital costs, but you still have to worry about operating costs. You are considering several options: - Don't opera
1. Discuss whether demand, equilibrium price, and quantity increases or decreases for gas and red meat, respectively, in the following two scenarios. (1) Consumers expect the price of the gas to be higher in the future (2) A medical report is published showing that red meat is hazardous to your health
(See attached file for full problem description) --- Part A: I attempted to find the profit-maximizing output and I got 42.857. From there I came up with a price of -25.71 (I don't feel that this is correct). After that I tried to find the profit, but when I went back to substitute my quantity (Q1) back into the profit equat
No idea how to start this game tree? *************************************** Bank run game...here's the info: 2 players: each deposits $100 The bank invests this $200 2 dates at which investors can withdraw: Date 1: investment does not reach maturity Date 2: investment does mature At each date, both investors s
Is there a satisfactory theory that describes behaviour of oligopolies discuss?
Suppose all of the firms in a small sconomy satisfy the conditions for efficiency except for one firm, LuthorCorp, which is a monopolu producer of computer anti-virus programs. LuthorCorp is also the only hirer of anti-virus program engineers in this economy. Suppose the production function for anti-virus program is Q=F(L)=2L, w
Suppose Firms A and B sells competing products and is deciding whether to undertake advertising campaigns. Each firm will be affected by its competitor decision. The possible outcomes of the game are illustrated by the payoff matrix below.
Dominant Strategy (see attached document). Thank you.