1. Using the concepts of marginal costs and marginal revenues, explain why economic profits are maximized where marginal revenue equals marginal cost and why profits decline if the price is above or below the profit maximizing price. 2. Using the concepts of demand, supply, equilibrium, and price ceilings, explain why a short
2. Suppose that the following table describes prices, incomes, and per person lobster consumption in three U.S. cities. City Per Person Income Lobster Price Per Person Consumption Boston MA High Mod High San Fran CA High High Medium Boothbay Harbor ME Low Mod Low Use the concepts of opportunit
A South America country with fixed exchange rate system has close economic ties with the USA symbolized by extensive trade and unrestricted flow of capital between the two countries. The economy of this country is in recession and the president of the country tries to get the central bank to intervene and help the economy out o
The federal Insurance Contributions Act (FICA) tax is a payroll tax that finances Social Security and MEdicare. By law, employees each contribute 7.65% of the employees wages toward the programs. Note that the tax rate is 15.3% of wages and the tax payments are equally divided between employers and employees. Would an econom
Explain a real world factor that plays an important role in competition.
I am in the process of writing a 2000 word paper that provides an economic profile of the oil industry. I am looking for a overview of the oil industry (economically), and also how the economy affects the success of the oil industry as well as how it can influence the industry in a negative way.
Assume there is a market for an industrial compound, Weon. This industrial compound is used as an input for the production of cleaning agents. a. Draw a correctly labeled graph of supply and demand showing the equilibrium price and quantity. Also clearly identify the equilibrium in this market. b. Suppose the manu
What are the effects on American wages and purchasing power of the continued outsourcing of labor overseas. What are some of the reasons for these trends. What effect has this trend had on the American workforce; especially the working class?
Using such areas as manufacturing and information technology or any related industry / areas that have had high job growth rates explain a scenario that would cause a shift in labor supply and demand.
1. Discuss the barriers to entry into an industry. Explain how each barrier can foster either monopoly or oligopoly. Which barriers, if any, do you feel give rise to monopoly that is socially justifiable? 2. How does the demand curve faced by a purely monopolistic seller differ from that confronting a purely competitive f
1. "Monopolistic competition is monopolistic up to the point at which consumers become willing to buy close-substitute products and competitive beyond that point." Explain 2. "Competition in quality and service may be just as effective as price competition in giving buyers more for their money." Do you agree? Why? Explai
Determining the economic and socially efficient market outcomes. Description and example of moral hazards.
1. 35% Turkey growers operate in a competitive, constant cost industry. This industry has reached a long run equilibrium at a price of $1 per pound of turkey a. Illustrate the situation for a typical grower and the market. Show price, farm and market quantity, and farm profits. It is known that unregulated waste products f
1. Consider a competitive industry consisting of 100 identical firms each with the following cost schedule: Output Total Cost 0 300 1 400 2 450 3 510 4 590 5 700 6 840 7 1020 8 1250 9 1540 10 1900 Market demand is given by the following schedule: Price: $360 290 230 180 140 110 80 Quantity Demanded: 400 500 60
3. If the dollar appreciated in real terms against the euro by 2% in a year, and in same year, inflation rates in the U.S. and the euro zone were 3% and 1%, what would be the percent change in the value of the dollar relative to the euro in nominal terms? a. appreciated 6% b. appreciated 4% c. appreciated 2% d. no
Calculating price elasticity of demand, profit-maximizing, sketching marginal cost and average cost curves.
1. Huntsville, Alabama is engaging in a bumper sticker advertising campaign. Monthly sales data suggest that the following demand relationship exists: Q = 6,000 - 2,000P Where: Q = bumper-sticker sales P = price A. How many bumper stickers could be sold at $2 each? B. What would the price have to be in order to
1. Suppose that a union's goal is to maximize the total wage income received by union workers, namely, the average union wage times the number of union workers employed. To achieve this goal, the union should: (Decrease the union wage rate if labor demand is inelastic and increase the wage rate if labor demand is elastic, Decrea
Production Cost and Profit Maximization: 1. Fill in the following table from the data given below: TC MC ATC AFC TVC AVC 0 1 2 3 4 5 6 7 8 a. AFC for 8 units of output is 4.5. b. AVC for 4 units of output is 15. c. TC is increased by 14 when the 5th un
Product line price line and quality model. See attached file for full problem description.
The table below are the demand and supply schedules for television sets in Venezuela, a "small" nation that is unable to affect world prices. Price per TV set Quantity Demanded Quantity Supplied $100 900 0 200 700
What would be the results of a nationwide expansion of a program offering financial incentives to hospitals to train fewer doctors?
Problem II (parts a and b are 8 points each and c and d are 7 points each) Read the following New York Times (8/25/97) article and then answer the questions that follow. 1,000 Hospitals Will Be Paid To Reduce Supply of Doctors, New York Times, 8/25/97, Warren Leary The Government has agreed to the nationwide expansion o
Problem I: European market for DVDs There are many markets in which a "hardware-software" linkage is important. This problem examines supply and demand forces for an emerging market, namely, digital video disks or DVDs. The DVDs are the software and DVD players are the associated hardware. The dynamic evolution of the DVD marke
1. As part of the preparations for the arrival of a hurricane, NC residents sought to purchase electricity generators. As a result, you expect that in NC a. the price of generators will tend to rise b. the price of generators will tend to fall c. shortages will tend to be observed d. a and c e. b and c. 2. Recent stu
(See attached file for full problem description) --- Profit Maximization: Equations. Rochester Instruments, Inc., operates in the highly competitive electronics industry. Prices for its RII-X control switches are stable at $50 each. This means that P = MR = $50 in this market. Engineering estimates indicate that relevant
1. What type of monetary policy has the Federal Reserve been using for the past year (easy/expansionary, tight/contractionary, or neutral/non-involvement)? 2. Why have they been using this policy? 3. How have they implemented the policy (changing the "interest rate", changing the reserve ratio, or open mark
These questions come from Baye's fifth edition of Managerial Economics and Business Strategy. Chapter 14: A Manager's Guide to Government in the Marketplace. 1) You are the manager in a market comprised of five firms, each of which has a 20 percent market share. In addition, each firm has a strong financial position and is
The federal government wants to cool down the overheated economy by cutting its spending. Describe how this policy may affect the unemployment rate. Next, consider the following three scenarios, and USE APPROPRIATE DIAGRAMS to show the likely effects of an activist policy in both the short and long run. A. The economy is abo
Derivation of the LM and IS schedules; using them to determine equilibrium in an economy with changing conditions
See attached file for full problem description. --- 2. Let us take a look at nominal versus real interest rates . The following equations describe the economy of Hermisia: Consumption: C=.8 (1-t) Y where t, the tax rate is .25. Investment: I=900 -2r where r is the real interest rate. Government: G=700
Suppose the banking system's nonborrowed reserves total $48.3 billion, with total legal reserves standing at $51.2 billion. What must borrowed reserves be? This morning the Federal Reserve decided to undertake the sale of $500 million in government securities through open market operations. What will the new level of nonborro
How does your business go about estimating its sales? (This is often a confidential procedure.) How does it estimate the demand for new products so that it can prepare a production run? Which is more important for your business: lower cost, quality, customer expectations, or some other feature? Why?
(1) In the first graph link below, move the green pointer on the horizontal axis to "3.0" and how many pizzas were gained and how many robots lost and why? http://highered.mcgraw-hill.com/sites/0072819359/student_view0/chapter2/interactive_graphs.html (2) Explain the difference between "rational self-interest" and "greed"