silverwasp840

1.Evaluate the arguments for the use of market or incentive-based instruments versus command and control instruments in the regulation of environmental externalities under conditions of certainity?

Suppose that there are two states of the world, s1 and s2, and that an individual who knows the probabilities, p1 and p2, of the two states chooses among state-contingent consumption bundles to maximize the expectation of a state-independent, strictly increasing von Neumann- Morgenstern utility function.

Now suppose that the individual is risk-averse, and that he is indi↵erent between (6, 2) and (2, 6). Show that he must weakly prefer (4, 4) to either of these bundles. [Hint: Use a graph to explain the questions above.]

What is the effect on product x if the price of product y decrease 

Robert's New Way Vacuum Cleaner Company is a newly started small business that produces vacuum cleaners and belongs to a monopolistically competitive market. Its demand curve for the product is expressed as Q = 5000 - 25P where Q is the number of vacuum cleaners per year and P is in dollars. Cost estimation processes have determined that the firm's cost function is represented by TC = 1500 + 20Q + 0.02Q².

Show all of your calculations and processes. Describe your answer for each question in complete sentences, whenever it is necessary.

a. What are the profit-maximizing price and output levels? Explain them and calculate algebraically for equilibrium P (price) and Q (output). Then, plot the MC (marginal cost), D (demand), and MR (marginal revenue) curves graphically and illustrate the equilibrium point.

b. How much economic profit do you expect that Robert's company will make in the first year?

c. Do you expect this economic profit level to continue in subsequent years? Why or why not?

The change in price from a leftward shift of the supply curve will be greater if

a. The demand curve is relatively steep than if the demand curve is relatively flat

B. The demand curve is relatively flat than if the demand curve is relatively steep

C. The demand curve is horizontal than if the demand curve is vertical

d. The demand curve is horizontal than if the demand curve is downward sloping

Assume that for every person, health (h) is determined by income (y) and by a genetic factor (g) through the production function: h = -0.5y + 2g. Show that increases in income in this society are associated with decreases in health.

Net benefits of an alternative equal:

a) benefits minus costs.

b) benefits divided by costs.

c) the sum of benefits and costs.

d) the product of benefits and costs.

Suppose the quantity demanded of ski boats falls from 4.0 million to 3.0 million. What is the percentage change in quantity demanded using the midpoint formula?

Tomatoes grow well in Kansas. Why do the people of Kansas buy most of their tomatoes from Florida, Mexico, and California?

Transfer payments are excluded from government purchases because it:

A) they are a reward to individuals who have been productive in their entire lives.

B) they are already included as part of the investment.

C) they are difficult to measure.

D) nothing is being produced in return for the payment.

A rational decision-maker takes an action only if the

a. Marginal benefit is less than the marginal cost.

b. Marginal benefit is greater than the marginal cost.

c. Average benefit is greater than the average cost.

d. Marginal benefit is greater than both the average cost and the marginal cost.

The quantity supplied of hot dogs is 200 at the unit price of $3.50. Suppose the price elasticity of supply by the intial value method is 2, and you would like to induce sellers to increase the quantity of hot dogs supplied to 220. The new price must be:

a. $1.50

b. $2.00

c. $2.50

d. $3.00

In the market for widgets, supply is represented in the following equation:

QS= 20 + P

If you observe that 100 units are sold, what would you expect the price to be?

A firm's cost of production is determined by all of the following except

A market failure is when markets do not bring about profit maximization. True or false

Suppose that inflation is falling while the quantity demanded and output are rising. The economy is likely on a point on:

a. The aggregate demand curve above the short-run aggregate supply curve.

b. The aggregate demand curve below the short-run aggregate supply curve.

c. The short-run aggregate supply curve above the aggregate demand curve.

d. The short-run aggregate supply curve below the aggregate demand curve.

e. This situation is not possible.

A) increases as more of the good is consumed.
B) is measured by the height of the individual consumer's demand curve.
C) is equal to the area above the price and below the individual consumer's demand curve.
D) is exactly equal to the price for all units purchased by the consumer.

Suppose a country's real GDP increases. At the same time, its population also increases. What happens to its standard of living? Select one:

a. Its standard of living depends on the price level.

b. Its standard of living remains the same.

c. Its standard of living could rise if population growth exceeds output growth. 

d. Its standard of living could rise if population growth is smaller than output growth.

Black markets that operate outside the legal system are often characterized by

A) low profits for suppliers.
B) decreased prices.
C) lower opportunity costs for suppliers and buyers.
D) the use of violence as a means of settling disputes.

If savings is less than investment what will happen to interest rates in the Classical model?

1. What component of GDP (if any) will each of the following transactions affect? Explain.
a) A family buys a new refrigerator.
b) Aunty Jane buys a new house.
c) Kina Pharma sells drugs from its inventory.
d) Emmanuel buys a pizza.
e) The government builds a new Motorway from Accrato Kumasi
f) You buy a bottle of California wine.
g) Samsung build an assembly plant in Ghana.

2. Consider an economy that produces only four types of fruit: apples, oranges, pineapples, and bananas. In the base year (2017), the production and price data were as follows:

In the current year (2020), the production and price data are as follows:

(a) Calculate the nominal GDP in the current year and in the base year. What is the percentage increase since the base year?
(b) Calculate the real GDP in the current year and in the base year. By what percentage does real GDP increase from the base year to the current year?
(c) Find the GDP deflator for the current year and the base year. By what percentage does the price level change from the base year to the current year?
(d) Would you say that the percentage increase in nominal GDP in this economy since the base year is due more to increases in prices or increases in the physical volume of output?

3. The following information is obtained from the World Bank’s World Development Indicators on the Economy of Ghana for the year 2015:
i) GDP per capita (constant 2000 US$) - $1696.08
ii) GDP per capita (current US$) - $1381.41
ii) GDP per capita, PPP (constant 2005 International $) - $3953.21
 
a) What factors could account for the difference between the figures in i) and ii)

b) What factors could account for the difference between the figures in i) and iii)?

c) What factors could account for difference between the figures in ii) and iii)?

4. The following relationships hold in the economy of Matata Island:
𝐶 = 320 + 0.4(𝑌 − 𝑇)

𝐼 = 150
𝐺 = 275
𝑇 = 200
a) Explain the concepts of marginal propensity to consume (MPC) and marginal propensity to save (MPS).

b) What is the MPC for this economy?
c) Explain the concepts of the autonomous spending and tax multipliers.
d) What is the autonomous spending multiplier for this economy?
e) What is the equilibrium level of income for this economy?
f) Suppose that the full employment level of output for this economy is 4000. What sort of output gap is Matata island facing?
g) What kind of policy can the government use to close this kind of gap? Explain with the aid of a diagram.

5. a) For the purposes of assessing an economy's growth performance, which is the more important statistic: real GDP or nominal GDP? Why?
b) Why are goods and services counted in GDP at market value? Explain.
c) What is the difference between intermediate good and final good? Why is the distinction important for measuring GDP?

In the discussion of German and Japanese postwar growth, the text describes what happens when part of the capital stock is destroyed in a war. By contrast, suppose that a war does not directly affect the capital stock, but that casualties reduce the labor force. Assume the economy was in a steady state before the war, the saving rate is unchanged, and the rate of population growth after the war is the same as it was before.

a. What is the immediate impact of the war on total output and on output per person?

b. What happens subsequently to output per worker in the postwar economy? Is the growth rate of output per worker after the war smaller or greater than it was before the war?

What is the consumer surplus for the market from the production of the 100th unit of a good?

a. the marginal social cost of the 100th unit

b. the marginal social benefit from the 100th unit

c. the opportunity cost of producing the 100th unit

d. the marginal social benefit from the 100th unit minus the marginal social cost of the 100th unit

e. the marginal social benefit from the 100th unit minus the price paid for the 100th unit

If the firm's fixed costs double while variable costs are unchanged, then

A) marginal cost remains unchanged.
B) marginal cost more than doubles.
C) marginal cost doubles.
D) average total cost remains unchanged.

Suppose a country has a money demand function Md = kY, where k is a constant parameter. The money supply grows by 12 percent per year, and real income grows by 4 percent per year.

a. What is the average inflation rate?

b. How would inflation be different if real income growth were higher? Explain.

c. How do you interpret the parameter k? What is its relationship to the velocity of money?

d. Suppose, instead of a constant money demand function, the velocity of money in this economy was growing steadily because of financial innovation. How would that affect the inflation rate? Explain.

Suppose that Omar gets 40 utils from consumption of 1 cup of coffee. His marginal utility from the second cup of coffee is 22 utils. What is the total utility of Omar from the consumption of 2 cups of coffee?

For a particular good, a 5 percent increase in price causes a 2 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

A. There are many close subsitutes for this good.

B. The good is a luxury.

C. The market for the good is broadly defined.

D. The relevent time horizon is long.

(a) Explain why the cross elasticity of demand for substitute goods is positive and the cross elasticity of demand for complements is negative.

(b) Explain why the price elasticity of demand changes along a linear demand curve.

(c)

(i) Using the information in the table, calculate the income elasticity of demand for good X and characterize the good. Use the midpoint formula.

(ii) Can you calculate the income elasticity of demand for good Y? If you can, show your calculation and characterize the good. If you cannot, explain why.

1. Suppose that a 10% increase in the wage results in a 5% reduction in employment. In this case, labor demand is said to be:

A. elastic

B. inelastic

C. unit elastic

2. Which of the following best explains why elasticity varies along a linear demand curve?

A. As the quantity of labor demanded rises, the percentage change in quantity demanded declines (for a given change in labor use) while the percentage change in wage increases.

B. As the quantity of labor demanded rises, the percentage change in quantity demanded rises (for a given change in labor use) as does the percentage change in the wage.

C. As the quantity of labor demanded rises, the percentage change in quantity demanded declines (for a given change in labor use) as does the percentage change in the wage.

D. As the quantity of labor demanded rises, the percentage change in quantity demanded declines (for a given change in labor use) while the percentage change in wage decreases

3. Labor demand is more elastic when:

A. the substitution effect resulting from a wage change is larger

B. the scale effect resulting from a wage change is larger

C. both are correct

D. none of the above

4. The scale effect associated with a change in the wage is larger when:

A. the demand for the final product is more elastic

B. labor costs are a smaller share of total costs

C. there are many close substitutes for this category of labor

D. economics of scale are present in the production of the good

5. The price elasticity of demand for the final products affects the own-wage elasticity of demand for labor by affecting the magnitude of:

A. the substitution effect that occurs in the labor market

B. the scale effect that occurs in the labor market

C. both substitution and scale effects

D. neither substitution nor scale effects

6. Unions are expected to attempt to:

A. make it more difficult to replace labor with other resources

B. reduce the elasticity of demand for the final product

C. support laws that reduce the elasticity of supply of other resources

D. all of the above.

E. none of the above

7. Unions are likely to be less successful in negotiating higher wages in those labor markets in which:

A. the demand for the final product is more elastic

B. there are few close substitutes for union workers

C. the price elasticity of supply for other factors of production is relatively high

D. labor costs comprise a small share of total costs

Imagine you are running a firm with the characteristics of a perfectly competitive firm. Describe how your firm would maximize its short-run profits.

Suppose we are analyzing Chile and Argentina economies using the Ricardian model. They can both produce bicycles and snowboards. In Chile, MPLb = 4 bicycles while MPLs = 6 snowboards. In Argentina, MPLb =2 bicycles while MPLs = 8 snowboards.

1. Which country has an absolute advantage in bicycle production?

A.Chile

B.Argentina

C.Neither Argentina nor Chile has an absolute advantage.

D.Both Argentina and Chile have an absolute advantage.

2. What is the relative price of snowboards in Argentina before Argentina and Chile trade with each other?

A.2/3

B.3/2

C.4

D.1/4

3. Which country has a comparative advantage in snowboard production?

A.Chile

B.Argentina

C.Neither Argentina nor Chile has a comparative advantage.

D.Both Argentina and Chile have a comparative advantage.

4. International trade will occur between Chile and Argentina as long as the world price of a snowboard is

A.lower than 1/4.

B.higher than 2/3.

C.between 1/4 and 2/3.

D.between 3/2 and 4.

5. Suppose the world price of a bicycle is 2 snowboards, which of the following trading scenarios is consistent with this price?

A.Chile exports 20 bicycles and imports 40 snowboards.

B.Chile exports 20 snowboards and imports 40 bicycles.

C.Argentina exports 20 snowboards and imports 40 bicycles.

D.Argentina exports 20 bicycles and imports 40 snowboards.

6. Suppose the world price of a bicycle is 2 snowboards, what will be a Chilean worker's real wage at the international trade equilibrium?

A.4 bicycles

B.8 snowboards

C.both A and B are correct

One way that governments can improve market outcomes is to ensure that individuals are able to own and exercise control over their scarce resources. True or False.

The following table gives the demand and supply scheddules for widgets.

The equilibrium price in this is $___.

The equilibrium quantity in this market is ___ unit.

If this price in this market was $30, there would be a ___ (A.) shortage, B.) surplus) of ___ units

What is one counter-argument to the premise that the wealth gap is a serious problem which needs to be addressed? 

In 2004, oil facilities in Iraq were attacked and strong economies in the United States and China boosted the demand for oil.

a. Demonstrate graphically how these events led to increases in oil prices in June 2004. What was the effect on the equilibrium quantity of oil bought and sold?

b. As a result of political pressure, OPEC agreed to increase the daily quota by 2 million barrels a day. What was the likely effect on the equilibrium oil price and quantity? Demonstrate your answer graphically

What will occur in the market for cars if rising energy prices increase the cost of producing steel? Explain your answer.

Which one of the following is correct?

a. Oligopoly firms will ALWAYS be able to make profits in both the short run and long run

b. Monopoly firms can earn profits in the short run, but cannot do so in the long run

c. A perfectly competitive firm can make profits in the short run but will make zero economic profits in the long run.

d. Firms in monopolistically competitive markets can make positive economic profits in both the long and short-run

Labour Theory of Value states that
A. Value of a commodity is produced only by current workers.
B. Value of a commodity is the sum of the value of all inputs (past labour) as well as the current value-added by workers
c. value of a commodity is equal to the sum of wages and salaries of workers.
D. Value of a commodity is equal to the sum of the marginal products of different factors of production