Consider a 2-good economy with a rational consumer who has weakly monotone and weakly convex preferences. He lives for one period, has some fixed income M, and doesn't have any initial endowment of goods. Which of the following is true?
Q: Austin is going on holiday with his infant daughter and has a first class air ticket. He values…
A: This question is based on the Coase theorem.
Q: Determine whether each of the statement is true, false, or uncertain. If the statement is false or…
A: Note: You have uploaded two questions at a time. Hence, we shall answer only the first one for you.…
Q: Consider the following economy with two goods, x and y, and two consumers, A and B. The tastes of…
A: Pareto -efficient points refers to those equilibrium points deviating from which no person can be…
Q: Find a maximum profit for a firm if its total revenue function is TR = 50Q - Q2 and its total cost…
A: Profit maximization occurs at the point where the Marginal revenue and Marginal cost are same.…
Q: B) The table below shows the information on quantity, price and cost of a monopolist. Assume that…
A: Given information Fixed cost=20 Monopolistic firm maximize profit.
Q: What will happen to the market supply curve of gadgets if a new gadget producer enters the market?…
A: Supply Curve: - supply curve is the graphical way of showing the relationship between the quantity…
Q: A homogenous product is produced by two rival firms. The firms have the same costs. The demand faced…
A: Given information Demand functionQ1 =40-P1+0.5P2 Q2=40-P2+0.5P1 TC1=50Q1 TC2=50Q2
Q: 1. What happens to the demand curve for labor in the following situations: a) On factory workers:…
A: When demand increases, the demand curve shifts to the right, and when demand decreases, the demand…
Q: Bob's lawn mowing service is a profit maximizing, competitive firm. Bob mows lawns for $27 each. His…
A: A competitive firm is one of many firms producing identical goods.
Q: In the market for beef, the price of a pound of beef rises. Explain the effect of this event on the…
A: Supply curve shows a positive relationship between price and quantity supplied. There are various…
Q: Draw a budget line with good X on the x-axis and Good Y on the Y axis. Graphically illustrate the…
A: Price effect is basically a term that is used to describe the change in the demand preference of a…
Q: margina i propenfity ij 0.5 AUTonomas conumptiin 200 governmentspeniaing is Jl0 intended invesmentis…
A: Note: There are multiple sub parts for this question. We shall answer the first three sub parts for…
Q: Suppose that initially Px = 2, Py = 8, 1 = 96 and the Marshallian demand function for %3D 0.51 0.5Px…
A: Note: You have uploaded more than one question at a time. Hence, we shall answer only the first one…
Q: 5) The following set of (extensive form) games represent two firms who are attempting to form a…
A: "In game theory, a nash equilibrium is described as an optimal choice of the game where both players…
Q: Which of the following is likely to have the largest effect on spending? O A. A change in expected…
A: People spend out of the income they have already earned . and spending influence the aggregate…
Q: QUESTION 19 If your total profit is 8000 dirhams and your total revenue is 10000 dirhams. How much…
A: Q19) "Total profits are computed by deducting total cost from total revenue."
Q: Inflation is defined as increases in the average prices in the economy. The February 2022 inflation…
A: Inflation is defined as the rise in the average price level of commodities and services in the…
Q: Please explain each question
A: The aggregate demand curve shows the negative relationship between the price level and the total…
Q: Given the example of Toyota as a car manufacturer, explain to the management team how the company…
A: The process of determining a value for a commodity or service is known as pricing in economics and…
Q: 11. The graph below shows the marginal revenue, marginal cost, and average total cost at different…
A: Prices are given for a perfectly competitive firm, and it could earn positive or negative profits…
Q: Suppose a competitive market has a horizontal long- run supply curve and is in long-run equilibrium.…
A: In financial matters, the long-run is a hypothetical idea wherein all markets are in harmony, and…
Q: Possible solution in a post normal perspective about regaining the economy of a third world country.
A: Third world economy Third world economy stands for the countries which are less developed. These…
Q: At what interest rate payable quarterly will payments of P 500 at the beginning of each 3 months for…
A: The present worth of a cash flow series at a particular rate of interest and over a specific amount…
Q: A homogenous product is produced by n rival firms. They have the same costs. The market demand is: P…
A: P = 80-Q TCi = 50qi
Q: A rent-a-car company currently rents their cars out at the market price of £50 per day, with renters…
A: Complementary Goods:- A complementary good is one which helps to improve the quality of some other…
Q: In the late 1990s, car leasing was very popular in the United States. A customer would lease a car…
A: According to the question, A customer would lease a car from the manufacturer for a set term,…
Q: Assume that a consumer's utility over two years is a function of consumption during the twe years.…
A: Utility function : U = ln C1 + B ln C2 Intertemporal Budget Constraint : C1 + C2/(1+R ) = Y1 +…
Q: What is capital and labour intensive production technique
A: Production technique refers to the process through which the goods and services are produced by the…
Q: Our very existence makes environmental problems inevitable. Environmental problems are not new.…
A: Externality is the negative or positive spillover by the consumer or producer which affects the…
Q: 6. In the country Gamma, it takes 6 hours to produce 1 automobile and 1 hour to produce a bale of…
A: A country or an individual is said to have a comparative advantage if it can produce the good at a…
Q: “The legal sector has been among the fastest to race back to the office this year. Amid a rise in…
A: Corporate culture Corporate culture stands for attitude and practices that determine how the…
Q: A start-up mobile phone manufacturer who produces mother boards has fixed costs of $320,000 per year…
A: Variable costs will be costs that change as the amount of the great or administration that a…
Q: Question 9 A firm has a cost function cL, K) = wL + rK with a production function pL,K) = AL“ K® .…
A: Lagrange approach is used to minimise or maximise a function subject to a constraint
Q: To price-discriminate, firms must identify a customer's or a group of customers' willingness to pay.…
A: Price discrimination refers to the policy of a monopolist firm to charge different prices from…
Q: The hour and date of commencement of the term of office of the President and Vice-President cannot…
A: Answer: The Twentieth Amendment to the United States Constitution changed the beginning and ending…
Q: Consider a homogeneous good duopoly with linear demand P(q) = 12- q,where q is the total industry…
A: Profit is maximized where the MR=MC. The welfare declines when a we move from Cournot competition…
Q: 3. A monopolist is forced to lower its price in order to sell another unit of its product. This…
A: "Since you have asked multiple questions, we will solve first question for you .. If you want any…
Q: Samantha went to a farmers' market to buy strawberries. She is willing to pay up to $5 for the first…
A:
Q: cuss which macro challenge seems the most important to you as of May 2022: economic growth,…
A: Currently us is experiencing the inflationary situation because of the pandemic situation . in…
Q: In class, we use the dollar-euro exchange rate, Es/e to graph foreign exchange equilibrium. Let's…
A: Given information Expected future exchange rate Ee ¥/$=120 R ¥=0.001--- Rate of return on Yen…
Q: Directions: Discuss each task of a professional safety engineer using well thought of responses. The…
A: A very much planned mishap obstacle program can downsize laborer injury, awfulness and passing…
Q: A homogenous product is produced by two rival firms. They have the same costs. The market demand is:…
A: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question and…
Q: Give a scenario in which nominal GDP increases but real GDP stays the
A: Hi! thanks for the question but as per the guidelines we answer one question a one time. Since you…
Q: Lower interest rates tend to lead to _______ spending by consumers and businesses, while higher…
A: Consumption spending and business spending depend on interest rates
Q: In 1950, Congress raised the federal minimum wage to seventy-five cents ($0.75) per hour. The CPI in…
A: Consumer price index is one of the measures to calculate inflation.
Q: The market research department of EZPub estimated that 5,000 textbooks would be purchased in Canada…
A: Demand shows different combinations of quantity demanded at different price levels
Q: Two mutually exclusive alternatives are being considered for the environmental protection equipment…
A: To find the alternative which is preferred over other , we find annual worth of the cash flows and…
Q: QUESTI ON 16 Suppose that for a particular firm the only variable input into the production process…
A: Disclaimer :- as you posted multiple questions we are supposed to solve the first one only as per…
Q: QUESTION 17 What formula is used to do the valuation after the explicit forecast period? OA Long…
A: Since you have asked multiple questions, we will solve first question for you. If you want any…
Step by step
Solved in 2 steps
- The economy is populated by 100 agents. Each agent has to divide 1 unit of timebetween work and leisure given the wage rate w paid on the labor market. In additionto the salary, he or she also receives dividend a income of π = Π/100 (the total profitof the firms Π is distributed equally among all the consumers in form of dividends)Suppose that the government does not incur expenditures, so G=0.The agent’s utility function depends on consumption (c) and leisure (l), and it is assumedto satisfy u(c, l) = 0.5 ln(c) + 0.5 ln(l). On the other side of the market, there arefirms who hire workers and produce output. The representative firm operates witha Cobb-Douglas production technology Y = zK^0.5N^0.5, where z denotes the totalfactor productivity, and K = 100 is a fixed amount of capital. Each of the firm’semployees receives wage w, i.e. the total labor cost of the firm is equal to wN^dSuppose that initially z = 1 (so the competitive equilibrium is the one we calculatedin class), but the…For a > 0, consider a consumer whose utility function amounts to u(x1, x2) = − exp(−ax1x2). Can you take first order conditions to solve the utility maximization problem? Explain your argument. Next solve the utility maximization problem, and derive Marshallian demands and the indirect utility function. Given your calculations, state and use the duality theorem to find the expenditure function and Hicksian demand Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.James's preferences over cake, c, and money, m, can be represented by the utility functionu (c, m) = c + m + µ (c − rc) + µ (m − rm)where rc is his cake reference point, rm is his money reference point, and the function µ (·) isdefined as µ (z) = z , z ≥ 0 and λz, z < 0 where λ > 0. 1. If his reference point is the status quo (that is, his initial endowment), what is themaximum price Sam would be willing to pay to buy a cake?2. If his reference point is the status quo, what is the minimum price Sam would be willingto accept to sell a cake he already owned?
- Suppose that X is an inferior good. A. Show using well labeled diagrams how you would derive the Marshallian Demand curve and compensated demand curve holding utility constant for a consumer maximizing her welfare subject to a budget constraint. B. Derive the consumer's compensated demand curve and draw the demand curve carefully for X, Under the two following rules to measure the amount of compensation required to estimate the substitution and income effects. (1) holding real income constant. (2) holding production possibilities constant (assume linear). C. Under what real model circumstance would you employ these scenario for measuring the compensated demand function for a good?Suppose a consumer’s preferences over two goods x_1 and x_2 are given by u = Square root (X_1,X_2). Her income is M and the two goods cost p1 and p2 per unit respectively. a) Derive her utility at the optimal consumption point as a function of prices and income. b) Now suppose the government imposes a proportional tax t on the value of the good x_1 (such as VAT). If the consumer approaches the government for income compensation to remain as well off as before the tax (i.e. compensating variation in income), how much money would she ask for? c) If instead, the government decides to maintain consumer’s utility level not through lump-sum transfer but by introducing a proportional subsidy S on the price of good 2, then what should be the size of the subsidy? d) Based on your answer in part c) discuss how much would it cost for the government to introduce both a tax and a subsidy at the same time? Can you think of any situation when this policy would make sense?Draw the compensated (hicksian) and uncompensated (marshallian) demand curves when: a) both normal goods when price of good 1 increases b) both normal goods when price of good 1 decreases c) both inferior goods when price of good 1 increases d) both inferior goods when price of good 1 decreases e) one normal good, another inferior good when price of inferior good (good 1) increases f) one normal good, another inferior good when price of inferior good (good 1) decreases Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
- Question 3 Consider the utility function of the form: ?=?1?1?2?2 Given the budget constraint: ?1?1+?2?2=? Show that the implied Marshallian demand curves are: ?1=?1(?1+?2)??1 ?1=?2(?1+?2)??2Assume that utility is given by u(x, y) = x0.3y0.7 1. Derive the Walrasian demand function. Then use the derived Walrasian de- mand functions to compute the indirect utility function. 2. Derive the expenditure function and the Hicksian (compensated) demand functions for this case. Hint: Use Propositions 5 and 4.The consumer has an incom Mand a utility function of the form u (x1; x2) = aInx1 + (1 - a)Inx2 If the prices of the two goods are given by p1 and p2, derive the Hicksian demand functions for a given utility level U: Derive the expenditure function. Using the concept of duality, derive the indirect utility function.
- Consider a consumer with utility function u(x1, x2) = α_1x_1^( 2) + α_2x_2^( 2) where α1 > 0 and α2 > 0. Assume that p1, p2 > 0.? (a) Derive expenditure function e(p, u). Verify that it is homogeneous of degree 1 in p and increasing in u. (b) Using expenditure function and Hicksian demand, calculate Walrasian demand and indirect utilityd. Holding Donald's income and Pd constant at $120 and $1 respectively, what is Donald's demand curve for carrots? e. Suppose that a tax of $1 per unit is levied on donuts. How will this alter Donald's utility maximizing market basket of goods? f. Suppose that, instead of the per unit tax in (e), a lump sum tax of the same dollar amount is levied on Donald. What is Donald's utility maximizing market basket? g. The taxes in (e) and (f) both collect exactly the same amount of revenue for the government, which of the two taxes would Donald prefer? Show your answer numerically and explain why Donald prefers the per unit tax over the lump sum tax, or vice versa, or why he is indifferent between the two taxes.A worker receives a wage rate w and has L hours of leisure every day (the total endowment of hours is 24 hours per day). The government gives a subsidy of rate s of her income (i.e. her income is (1+s) times what it would be without the subsidy). The worker cannot save, and initially faces no tax. She consumes a single consumption good, c. 1. Write a budget constraint for this individual and plot it. 2. Suppose that the worker has well-behaved preferences, i.e. she likes more consumption and leisure rather than less, she dislikes working, and she has decreasing marginal utility in consumption and leisure. a. Display graphically what the optimal consumption-leisure choice for this worker (no need for exact numbers as we don’t know the utility function; give intuition) 3. Imagine that instead of a subsidy rate, s, the government imposes income tax at rate t. What is the new budget constraint? Display on the same picture. In the new optimum, is the consumption higher? Explain the answer…