Consider an economy where the average citizen consumes only two goods, 400 cups of coffee at $3 each and 200 brownies at $4 each in 2019. Assume this is the consumption basket used for calculating the CPI. In 2020, the price of one of the goods decreases by $1, while the price of the other good increases by $2. Assume 2019 is the base year. Based on this information, there are two possible inflation rates. What are these possible inflation rates?

Q: Use a graph to explain how a customs union results in trade creation

A: A customs union is a type of trade agreement in which countries eliminate trade barriers, such as…

Q: Suppose that a price-taker firm has a marginal cost function given by: MC= 20+0.2q. The firm could…

A: A market cartel is a type of collusion among independent firms in an industry where they agree to…

Q: Explain and illustrate how the firm will determine its price and output if it was not regulated by…

A: An unregulated market refers to an economic system where there is no or minimal government…

Q: The demand and total cost functions for a monopoly firm are:   Q(P) = 39.5 – 0.5P TC  (Q) = 60 – Q…

A: Given Demand function: Q(P)=39.5-0.5P             .... (2) Total cost function TC(Q)=60-Q+0.5Q2…

Q: Long run monetary neutrality implies that fiscal policy can only change output, not prices, in the…

A: Money neutrality says that money is neutral in the long run.

Q: The period of time long enough to allow a firm to vary all of its inputs, to adopt new technology,…

A: We have to identify which time is long enough for a firm, to vary all of its inputs, to adopt new…

Q: Pamela worked as an auditor earning $60,000 per annum. She decided to open her own consultancy…

A: Total cost is the sum of fixed cost and variable cost.  Implicit costs are the opportunity cost.…

Q: Bert derives utility from reading comics c and eating sandwiches s. Comics cost $4, sand- wiches…

A: In this question, we are presented with different utility functions that describe the preferences of…

Q: Suppose that you are examining the cigarette market in the US. The supply curve slopes upward, while…

A: When the market as a whole does not allocate resources effectively, it is commonly referred to as a…

Q: Consider a hypothetical economy. Households spend $0.90 of each additional dollar they earn and save…

A: Aggregate expenditure: aggregate expenditure is the sum of consumption expenditure, investment…

Q: Explain why randomized controlled trials have been widely used recently in development economics…

A: A randomized control trial (RCT) is a type of scientific experiment used to evaluate the…

Q: Provide an example of a company that has a monopoly (could be a local monopoly).

A: Monopoly is a market structure whereby there is only a single seller selling completely…

Q: = 2yD/xD for David and MRSxy = a) Consider an economy with 3 agents, Mohammed (M), David (D) and…

A: Pareto efficiency, which refers to an allpcation of resources in which it is impossible  to make one…

Q: 34. Given the following Ricardo-type table shows the labor input required per unit of output in each…

A: Definition: A country has the absolute advantage in the production of a good if it can produce the…

Q: Suppose an economy's production is defined by the following neoclassical production function:…

A: A firm’s willingness to pay for each unit of labor it wishes to hire is shown by the labor demand…

Q: 8. Place an X in rightmost column for variables that are statistically significant at the 95%…

A: t-stat = coefficient value / standard error For 95% confidence level , for for the 2 tailed test.…

Q: Donald and Jack across from each other. Donald sells apple juice and Jack sells lemonade during hot…

A: Dominant strategy is the strategy that yields the higher Payoff and the strategy does not change…

Q: For the normal-form game shown here, what is the set of rationalizable strategy profiles? 2 b 0,5 1…

A: Nash equilibrium is the point of a game corresponding to which each participant optimizes his…

Q: Only answer BOLD and ITALIC part of the question.  A monopolist has discovered that the inverse…

A: Price discrimination is carried out by the monopolist depending upon the elasticity of demand of the…

Q: 9. The (incomplete) table below shows the x and y values for three data points. It also shows the…

A: Here for the given data on x & y variables. We have derived 2 estimated lines A & B which…

Q: Explain the role union preferences play in determining unemployment.

A: Union preferences refer to the goals, demands, and priorities of labor unions, which are…

Q: ves on hand $38,000 Deposit in the Fed $30,000 US government bonds $12,000 Checking account balances…

A: A savings account is a type of bank account that allows individuals to deposit and accumulate funds…

Q: 3. St Louis area voters recently approved a tax on sales of recreational marijuana. Who would you…

A: Tax incidence refers to the distribution of the burden of a tax between buyers and sellers in a…

Q: 4. Explain why firms in perfect competitive markets have no incentive to advertise for their…

A: Perfectly competitive markets are market structures characterized by the presence of numerous buyers…

Q: Refer to Figure 15.5. If GDP is below potential output, the effect on the money market is…

A: The level of real GDP an economy can sustainably produce over a period of time, given its available…

Q: 2070 [/ 1970 1870 1948 1949 REAL GDP (Billions of dollars) 2170 1770 1947 YEAR 1950 1961 ?

A: An increase in the real GDP of the economy in the short run is referred to as an expansion. A…

Q: a) Based on the information in the table, what is the demand function for this market? b) Calculate…

A: Demand refers to the quantity of a good or service that consumers are willing and able to buy at…

Q: = b) Consider agent A with (inverse) demand curve for the public good PA = 60 - 2QA and agent B with…

A: Agent A demand for public good PA = 60 - 2QA Agent B demand for public good = PB = 90 - 5QB Price is…

Q: On average, the price of a patented pharmaceutical drops between 30 and 50 percent after the patent…

A: A patent is an exclusive right granted for the invention of a product or a process. A patent gives…

Q: 3. The channels through which monetary policy affects economic activity are called? A. Transmission…

A: Financial coverage refers to the actions and selections taken with the aid of a significant bank or…

Q: PRICE (Dollars per subscription) 90 80 70 20 10 0 02 MR 6 8 10 12 14 QUANTITY (Thousands of…

A: A natural monopoly is one in which the largest provider in the industry, frequently the dominant…

Q: Under what circumstances does a liquidity trap arise and why does it lead to a failure in the above…

A: Liquidity trap is the condition in which increasing money supply do not lead to the decrease of…

Q: What is the money multiplier when the reserve requirement is a. 0.05?…

A: The money multiplier formula will be computed as: 1/r where r means the reserve ratio. It is an…

Q: Calculate the (economy-wide) currency ratio

A: Total deposits are the sum of all deposits made into a country's savings and checking accounts. It…

Q: value of the land. The more planes that fly, the lower is the amount of profits that the developer…

A: Airports total profit = 48X - X2 Developers total profit = 60Y - Y2 - XY

Q: χν 2yD/xD for David and MRSS xy a) Consider an economy with 3 agents, Mohammed (M), David (D) and…

A: MRS is the amount of one good that a consumer is willing to enjoy in exchange for another good with…

Q: = A monopoly sells its good in the US and Japanese markets. The American inverse demand function is…

A: Monopoly is the single firm in the market that has the power to price discriminate.

Q: COURSE: MICROECONOMICS 2 - MONOPOLY IN DURABLE GOODS A monopolistic firm has estimated its inverse…

A: We find maximum profit in case of monopoly by equating marginal revenue to marginal cost. We have to…

Q: Suppose the macroeconomic parameters are as follows in Turkey. Production: Y = A K1/3 L2/3 (A= 7 )…

A: The production function determines all the input bundles that produce the same output level. The…

Q: The purchase of a used pick-up truck for $9,000 is being considered. Records for other vehicles show…

A: Annual cost of owning and operating the truck: Fuel cost = $990 Oil, tires, and repairs cost = $990…

Q: How can the United States benefit from specialization and trade? Provide examples from principles of…

A: The united states can benefit from specialization and trade in several ways, as outlined by way of…

Q: The government of the republic of Zambia decides to introduce a 100% ad valorem tariff on all…

A: Foreign Exchange Market: It is market where individuals and institutions demand and supply for…

Q: a)Consider a homogeneous goods industry where two firms operate and the linear demand is given by…

A: Market demand curve:  p(y1 + y2 ) = a - b(y1 +  y2 )…

Q: Arif and Aisha agree to meet for a date at a local dance club next week. In their enthusiasm, they…

A: Nash equilibrium refers to a concept in game theory that describes a state of a game where no player…

Q: On the following graph, plot the aggregate demand curve that results from varying the price level…

A: Demand refers to the willingness and ability of the consumer to purchase goods and services at given…

Q: An extended rainy season has required many Northwest contractors to upgrade pumps and de-watering…

A: Annual worth analysis: In this method, the equivalent uniform annual cost of each alternative is…

Q: c. The United Nations have constructed an index of overall 'world happiness' that is given by the…

A: World Happiness = 2×(Happiness Score) + 3Life Expectancy

Q: Suppose a firm A produces a product q, but also pollution x that affects a second firm B. Firm A is…

A: A competitive market is a market where there are many buyers and sellers, all of whom have access to…

Q: If inflation expectations rise, the short-run Phillips curve shifts.

A: The short run Phillips Curve depicts the inflation/unemployment tradeoff when inflation expectations…

Q: Dollars Listen ABC KDE Quantity MC d) (A - B) times E units. ATC AVC MR The above graph shows cost…

A: To determine the profit-maximizing output level, we need information about the cost and revenue…