Form the given information about Cobweb Model, determine the market price, equilibrium price, and stability of the time path: Q = 220-0.5P, , Q = -25 + 0.4P and P, = 250 st Answer:
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- the following mundell-fleming model of a small, open economy will be used in all numerical exercises. it assumes a short-run framework in which prices are constant and output is demand-determined. c=150+0.8(y-t) i=500-30r nx=400-150e m/p=50+y-60r r=5 g=300 t=100 m=3000 p=3 the above values of exogenous variables will be referred to as their original values in the questions below. for this question, assume that the exchange rate is floating. derive the equilibrium equations for is* and lm*, sketch a graph of the two equations and solve for the equilibrium values of y, e and nx. b)Suppose the Treasury attempts to stimulate the economy by decreasing taxes T from 100 to 70. Calculate the new values of Y, e and NX. With the help of the graph you sketched in (a), explain the mechanism by which a new equilibrium is reached. answer part bthe following mundell-fleming model of a small, open economy will be used in all numerical exercises. it assumes a short-run framework in which prices are constant and output is demand-determined. c=150+0.8(y-t) i=500-30r nx=400-150e m/p=50+y-60r r=5 g=300 t=100 m=3000 p=3 the above values of exogenous variables will be referred to as their original values in the questions below. for this question, assume that the exchange rate is floating. Suppose the Treasury attempts to stimulate the economy by decreasing taxes T from 100 to 70. Calculate the new values of Y, e and NX. With the help of the graph you sketched in (a), explain the mechanism by which a new equilibrium is reached.Estimate the following model: purchase = β0 + β1traditional + β2aggregator + β3substack
- Suppose the market demand curve for a non-renewable resource is given by: Q=2000-40P. Consider a finite-period model. Which of the following are true? Suppose the marginal cost of extraction is constantly at 40. Suppose the risk-free interest rate is 10% Select all correct answers. a. When there is plenty of this resource, the marginal user cost can be zero in all periods on the optimal extraction path. b. If marginal user cost is 2 in a given period on the optimal path, the marginal user cost should be 2.2 in the previous period c. The dynamically efficient extraction quantity is 400 per period until the resource is exhausted. d. When 200 units are exhausted in a given period, the marginal user cost is 5.Consider a two-period competitive extraction model (where t = 0, 1) where demand is pt = 100 - 4qt, where qt is million tons mined per period, total extraction costs are 0 (the marginal extraction cost is zero), and the discount rate is 10 percent. If the total stock available to mine over these two periods equals 60 million tons, then… A. there is scarcity and the marginal user cost is positive. B. there is no scarcity and the marginal user cost is zero. C. there is scarcity but the marginal user cost is zero. D. there is no scarcity because the marginal extraction cost is zero. Consider the previous question. Based on your answer to that question, we would expect (note: you don't need to solve for any quantity levels to answer this question): A. q1 to be larger than q0. B. q0 to be larger than q1. (wrong) C. q0 to be the same as q1. D. q0 to be positive and q1 to be negative.The market demand for a monopoly firm is estimated to be: Qd = 80,000 -400P + 3M + 2000PR where Q is output, P is price, M is income, and PR is the price of a related good. The manager has forecasted the values of M and PR will be $60,000 and $15, respectively, in 2018. For 2018, the forecasted demand function is…
- Many states are now imposing severance taxes on resources being extracted within their borders. How is an increasing marginal extraction cost (over time) of depeletable resource by the imposition of severance taxes compared to the case without taxes? A. Marginal extraction cost increases due to the imposition of severance taxes B. Marginal extraction cost decreases due to the imposition of severance taxes C. Marginal extraction cost with severance taxes stays the same as the case without taxesHOTELLING MODEL Consider a market in which today’s crude oil price is $100/bbl, and the marginal cost of extracting another barrel of oil is $50. The interest rate is 10% per year. Assume that the market iscompetitive.a. What is the best prediction for the oil price 1, 2, 3, 4 and 5 years from now, based on the Hotelling model? Calculate the oil prices at the end of years 1, 2, 3, 4, and 5. The market suddenly learns that the marginal cost of extraction in years 2 and 3 will be only $40, after which the marginal cost is expected to fall to $20 for years 4 and 5.b. What is your prediction for future oil prices based on this new information? Calculate the oil prices at the end of years 1, 2, 3, 4, and 5. [Hint: assume that the price of year 1stays as in part a.]Write down the two decision variables of a household or the two goods (including both market and non market goods) in one period RBC model.
- You have been asked by the President of Tim Hortons Inc.’s (TMI) (Click here to review the TMI Case Study) to provide some consulting (advisory) service. Tim Hortons is considering opening its line of restaurants in China and is looking for a feasibility study that will include macroeconomic analysis and estimates of market potentials for THI products. There is a strong interest from investors in Hong Kong because there are a large number of Canadians in that country. Hong Kong, a former British colony, operates as an autonomous state but it is part of China. Opening THI restaurants in China can be considered as a two-stage process: (1) first open in Hong Kong and then (2) move into China. Hot on the heels of the success (or perhaps trying to show you can improve upon a less-than-satisfying performance) of your first foray into the assessment of macroeconomic conditions of a country (i.e., your research essay), you have decided to join forces with three of your peers to take it to…You have been asked by the President of Tim Hortons Inc.’s (TMI) (Click here to review the TMI Case Study) to provide some consulting (advisory) service. Tim Hortons is considering opening its line of restaurants in China and is looking for a feasibility study that will include macroeconomic analysis and estimates of market potentials for THI products. There is a strong interest from investors in Hong Kong because there are a large number of Canadians in that country. Hong Kong, a former British colony, operates as an autonomous state but it is part of China. Opening THI restaurants in China can be considered as a two-stage process: (1) first open in Hong Kong and then (2) move into China. Hot on the heels of the success (or perhaps trying to show you can improve upon a less-than-satisfying performance) of your first foray into the assessment of macroeconomic conditions of a country (i.e., your research essay), you have decided to join forces with three of your peers to take it to…A local restaurateur who had been running a profitable business for many years recently purchased a three-way liquor license. This license gives the owner the legal right to sell beer, wine, and spirits in her restaurant. The cost of obtaining the three-way license was about $90,000, since only 300 such licenses are issued by the state. While the license is transferable, only $75,000 is refundable if the owner chooses not to use the license. After selling alcoholic beverages for about one year, the restaurateur came to the realization that she was losing dinner customers and that her profitable restaurant was turning into a noisy, unprofitable bar. Subsequently, she spent about $8,000 placing advertisements in various newspapers and restaurant magazines across the state offering to sell the license for $80,000. After a long wait, she finally received one offer to purchase her license for $77,000. What is your opinion of the restaurateur’s decisions? Would you recommend that she accept…