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General Equilibrium

Econometrics Multiple Choice

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

Monopolistically competitive

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

Output Levels

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

Price, Profit, and Consumer Surplus

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

Macroeconomic help

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

Price Ceilings

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

Managerial Economics

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

Behaviour of firms in oligopoly markets

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.

What are the pure strategy Nash Equilibria of this game?

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

Consumer surplus /deadweight

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 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

Monopolists Marginal Cost

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.

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

Economics Problems

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

Shift in Consumer and Producer Surplus

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

3 problems

(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

Keynesian cross model

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.

Policy Implications

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

Short run profit maximizing

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

Light Rail Demand and Social Welfare

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

Ecomomice and management

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

Game Theory, Extensive form, bank run

No idea how to start this game tree? *************************************** Bank run'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

Oligopoly theories

Is there a satisfactory theory that describes behaviour of oligopolies discuss?

total profit of the firm

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

Dominant Strategy Notes

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.