Considera one good, two-period closed economy without government. The representative agent is endowed with ?1 in the first period and ?2 in the second period. (Q) Derive the optimal consumption and investment plans for the representative consumer and representative firm respectively.
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Considera one good, two-period closed economy without government. The representative agent is endowed with ?1 in the first period and ?2 in the second period.
(Q) Derive the optimal consumption and investment plans for the representative consumer and representative firm respectively.
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- 12. A justification for government intervention in the economy arises from the fact that market systems usuallyproduce ________ outcomes, but they do not necessarily produce ________ outcomes.A Efficient; equitableB Equitable; efficientC Efficient; profitableD Profitable; equitableConsider the following consumer problem's facing a proportional once tax. Utility function over consumption (C) and leisure (L) U(C,L)= 3 ln(C)+ 2 ln(L) Total hours : H=40 Labor hours :NS =H-L Proportional income tax rate = 0.2 Production function: Y =zND Total factor productivity : z =4 The representative consumer maximizes utility, the representative firm maximizes profit, and the government balances budget . What is the tax revenue at equilibrium.?Consider the following consumer problem's facing a proportional income tax. Utility function over consumption (C) and leisure (L) U(C,L)= 3 ln(C)+ 2 ln(L) Total hours : H=40 Labor hours :NS =H-L Proportional income tax rate = 0.2 Production function: Y =zND Total factor productivity : z =4 The representative consumer maximizes utility, the representative firm maximizes profit, and the government balances budget . What is the tax revenue at equilibrium.?
- 9.Refer to Figure 2. Select the correct statement. A. Panel B is an example of a good, no- or low-cost public education program, and the social optimal ouput is Q5. B. Panel A is an example of a good, no- or low-cost public education program, and the social optimal ouput is Q3. C. Panel B is an example of a good, no- or low-cost public education program, and the social optimal ouput is Q4. D. Panel A is an example of a good, no- or low-cost public education program, and the social optimal ouput is Q2. E. None of the answers is correct.6. Describe how public choice economics model the behavior of various political actors (citizens, politicians,special interest groups, bureaucrat). Be specific in how they would model 2 actors decisions. Give examples.10. A social indifference curve showsa . all allocations that yield the same total utility to individuals in the society.b. social attitudes toward equity.c. social attitudes toward efficiency.d. social utility possibilities as a function of resources.
- Q. 5. For auto makers, an important decision is to determine what features a new car model should be provided based on cost-benefit analysis. In what ways can economists help auto manu- facturers estimate the marginal rate of substitution between features such as vehicle interior size and acceleration? (a) Examining production cost data (b) Conducting consumer surveys about willingness to pay for auto features (c) Solving the standard consumer model (d) Statistically analyzing historical data on purchases of different types of autos (e) B and D only Q. 10. When firms determine whether to invest in research and development (R&D), they need to consider many factors. Which of the following is NOT one of the important factors that should be considered? (a) The market size of the product today. (b) The market potential for the product in the next few years. (c) The R&D investment of the competitors on similar products. (d) Potential new products that may be substitutes of the…7 Decentralization: You want to introduce lean manufacturing at your plant, but you are not sure whether it will work or not. You think that the outcome is equally likely to be great (incremental profit = 10), good ( = 5), ok ( = 1), or bad ( = M with M = 4). Your plant manager, who actually understand manufacturing knows , but he ís known to be lazy, and thus evaluates the project with a biased utility b (where b is his cost of effort to implement the project). Assume that you are risk-neutral, and that the plant manager implements the project when indifferent. (a) As a function of the bias b, should you decide yourself without the input of the plant manager, or should you delegate the decision to the plant manager? (b) Now assume that the bad outcome is actually a disaster, M = 8. How does your answer to part (a) change? Discuss.“How to allocate limited resources to their best use is the very first and fundamental principle that you guys learn in a first course in both economics and finance.” Explain how the concepts and techniques covered in the various topics in this course can help address the issue. [Hint: Think about how NPV, as an investment decision rule, addresses the efficient allocation of limited resources problem. Specifically, why an investment project being “profit-making” may still be value- destroying and result in misallocation of resources?]
- Now,suppose N=3 with a market clearing interest rate. The first two agents are the same as earlier. The third agent has an endowment of 20 in the first period and consumes 15 in the second period. If the first two agents each consumed 21 units in the first period, how much did the third agent consume in the first period? Plz do fast13) Suppose a certain change will generate £5,000 of benefits and £3,000 of costs.This change can best be described as(a) a potential Pareto improvement.(b) inefficient.(c) Pareto efficient.(d) equitable.a) John has three options for investing his money (let's assume he doesn't worry about risk): a) put it into the stock market and earn a net income after taxes of $600; b) save the money in a savings account and earn a net income after taxes of $40; or c) buy government bonds and earn a net income after taxes of $320. The opportunity cost of buying stocks is 600 320 40 280 360 b) There are 100 identical people in the market. Each person has a demand function of D: P = 100 - Q The market price is $10. The total market quantity demanded is therefore 90 10 10000 9000 c) When assessing the welfare effects of taxes, we can conclude that O They are always welfare decreasing O They are always welfare increasing, because they allow the government to provide essential goods O They are usually welfare decreasing in the market in which they are raised, but for society as a whole it depends on how they are used O They are welfare neutral, because whatever is lost by producers and consumers…