In the analysis of the optimal level of a public good, suppose that each person's utility function is quasilinear: Ui(G) + Pi. Show that the optimal G is unique and independent of P1 and P2 if society has adequate resources. (Hint: See Solved Problem 17.3.)
Q: Question 3 of 10 Given the piecewise function shown below, select al of the statements that are true…
A: a piecewise-defined function is a function defined by various sub-functions, where each sub-function…
Q: . Choose two of these situations and explain whether it would be beneficial to a) raise prices or b)…
A: The market's responsiveness to price changes is measured by price elasticity. Elasticity is crucial…
Q: Define the economic efficiency. Explain in detail.
A: When every scarce resource in an economy is utilized and divided among producers and consumers in a…
Q: Suppose the federal tax on gasoline increased by 5 cents per gallon. Do you think that such an…
A: Energy is the lifeblood of any economy, and gasoline is the most widely used fuel on the planet. It…
Q: in new equipment will e can be sold for an estimated $8000. What is the rate of return of the error…
A: *Answer:
Q: A new market appears that works according to the rules of the Stackelberg model. The costs of firms…
A: Introduction Suppose here are two firms in the market. And market works according to the rules of…
Q: New firms likely to enter an industry when O a. the profit earned by the firm is likely to be high.…
A: Whereas in monopolistically competitive market, the sellers sell differentiated produces which are…
Q: According to principles of behavioral economics, we as human beings tend to put undue weight on…
A: Short-term advantages are those that may be acquired right away, but long-term benefits take a…
Q: Suppose that every driver faces a 3% probability of an automobile accident every year. An accident…
A: Individuals can browse an assortment of insurance plans presented by protection firms. These charges…
Q: . Exercise #3. Suppose the demand for goods 1 and 2 are respectively q1 = 12-p₁ + P₂/2 and q2 =…
A:
Q: Explain the 2 types of competitive pressures.
A: Competitive pressure is defined as a situation in which a firm faces pressure due to its…
Q: 1. What does Gross Domestic Product mean? Why do we need to use market value GDP? What for do we use…
A: "Gross domestic product is represented by GDP."
Q: our enterprising uncle opens a sandwich shop that employs 7 people. The employees are paid $6 per…
A: A firm hires optimal labor at the following point in order to maximize profit. i.e., MPL = W / P…
Q: A project has an initial cost of $50 000, net annual cash inflows of $20 000, and a $2 000 salvage…
A: The external rate of return (ERR) refers to the rate of return on a project in which any "extra"…
Q: Production possibilities of the United States (USA) and South Africa (RSA): USA RSA wheat…
A: Production Possibilities frontier shows the possibility of the production of two goods and services…
Q: (b) There are three people and two goods in an economy. The utility functions and initial bundles…
A: Utility function can be defined as the measure for a group of goods and services preferred by…
Q: Investment Cost Expected Life Market (Salvage Value) Annual Receipts Annual Ex Proposal A RM 10,000…
A: Internal rate of return (IRR) refers to the discounting rate at which net present value of the cash…
Q: Assume that the population is 40 million, the labour force is 20 million, and 18 million people are…
A: The unemployment rate is the percentage of the total labor force that is unemployed but actively…
Q: Economics Question 9 Which of the following is not true about Lindahl pricing? a. There is unanimous…
A: QUES. 9- Lindahl harmony is a state of equilibrium in a semi market for the pure public incredible.…
Q: PROBLEM NUMBER 1 A farmer can plant up to 8 acres of land with wheat and barley. He can earn…
A: A company's optimal point is when it is producing a large amount of items at the lowest feasible…
Q: Explain why demand policies can only reduce unemployment below the natural rate in the short-run.
A: In simple words we can say that the demand policies are generally known to be as that policies which…
Q: 4. Currently, the poverty threshold for a family of four is just over $25,000 a year. Among the…
A: The poverty threshold refers to the minimum level of income an individual or a family needs to…
Q: Suppose a perfectly competitive market is in equilibrium and demand for the pr decreases O in the…
A: In a competitive market, firms produce identical goods and they do not have any market power to…
Q: onsider a firm that sells its output in a perfectly competitive product market and hires labour in a…
A: Given the value: The marginal product of labour, VMPE= 20 - 5E Identical firms = 50 Supply function,…
Q: O different than the price charged by competing firms. O the same as the market price. O lower the…
A: A perfectly competitive firm has just a single significant choice to make — in particular, what…
Q: For the demand function (image 1) and supply function (image 2) a) the equilibrium price is: b)the…
A: Answer: Given, Demand function: fx=x-82 Supply function: gx=x2 (a). Let us equate the demand and…
Q: NeoclassicalEconomics 3.1 Explain the features of Neoclassical approach. 3.2 Make a comparison of…
A:
Q: 6. Producer surplus and price changes The following graph shows the supply curve for a group of…
A: Producer surplus is the difference between market price and minimum price sellers are willing to…
Q: You need to hire some new employees to staff your startup venture. You know that potential employees…
A: The expected value of hiring: Expected value of hiring = 0.1 35000 + 46000 +…
Q: risk of loss: lose 10 with probability 0.4 and lose 5 with probability 0.6. They are considering…
A: risk of loss: lose 10 with probability 0.4 and lose 5 with probability 0.6.
Q: Complete the following table with the quantity of labor supplied and demanded if the wage is set at…
A: Equilibrium in the labor market occurs at the intersection of demand and supply curves.
Q: what do you mean by financial inclusion, market-friendly environment, and fiscal incentive system in…
A: The Philippine economy is in excellent shape. It is ranked 37th in the world in terms of GDP. After…
Q: A company selling widgets has found that the number of items sold, x, depends upon the price, p at…
A: The average sales price and to the times the number of units sold yields revenue, which is computed…
Q: The first cost of a high-quality excavators is P203.4B or P203.8B depending on the size purchased.…
A: Here, it is given that the high-quality excavator has the primary or first cost as P203.4B or…
Q: Data from The Economist BigMac index from January 2022 shows that the local price of a Big Mac in…
A: Purchasing Power Parity The Theory of Purchasing power compares the currencies of Different…
Q: You were familiarized with GDP in this module. Sometimes, economic topics seem pretty remote and…
A: The COVID-19 crisis appears to have the potential to hasten or exacerbate a number of already…
Q: Can you give me summary of what is Alibaba Group: The Rise of a Platform Giant?
A: Alibaba was launched in 1999 to help small Chinese enterprises with export operations.Alibaba has…
Q: One of the key reasons for explaining the case for efficient allocation of unregulated resources…
A: When talking about efficient allocation, it can be said that producers and consumers will interact…
Q: Suppose you are hired as an economic consultant for Promax Consulting Company. Your job is to…
A: The perfectly competitive firm, maximize its benefit when its minimal expense is equivalent to the…
Q: 9. The treasurer of XYZ Corp. knows that the company will need to borrow $100 million in one year…
A: Derivatives refer to a contract that derives its value from the performance of an underlying entity.…
Q: PowerPoint about Principles of Marketing
A: Market refers to the place where the buyers or sellers sell and buy goods and services at the…
Q: (a) The YTM on a three year bond is 5%. What is the average expected short rate over the life of the…
A: Since you have posted 2 parts that are not related to each other so we consider it 2 questions, and…
Q: 1. China has a greater GDP value than Canada. Their national GDP is currently 2nd in the world. Why…
A: The measure that depicts the final value of goods and services being produced in an economy during a…
Q: Discuss why the expectations-augmented Phillips curve can explain what has happened to the…
A: According to the Phillips curve, inflation and unemployment are inversely related: as unemployment…
Q: Craig Nuts Inc. will need to invest in a new nut cracking machine. The plant engineer has gathered…
A: Given, First Cost : $250,000Annual Benefits : $73,000 in the first year and decreases by $1,200…
Q: U.S. firms would sometimes threaten their workers with moving their jobs to low- wage Mexico if they…
A: NAFTA was signed in 1994 with the goal of increasing commerce, removing obstacles, and lowering…
Q: If output is above the level of spending balance, then A income will decrease. income will increase.…
A: Good market equilibrium is where aggregate demand and aggregate supply are equal at certain price…
Q: Suppose the demand curve for an air fryer is given by the following linear function: p = 0.25x +…
A: The price will display on the left vertical axis, and the amount needed on the horizontal plane, in…
Q: 103.9 172.2 177.1 179.9 184.0 articular car cost $13000 in 1984, Using the CPI, which is the best…
A: A consumer price index is a cost record, the cost of a weighted typical market crate of buyer labor…
Step by step
Solved in 3 steps
- (Optimal Provision of Public Goods) Using at least two individual consumers, show how the market demand curve is derived from individual demand curves (a) for a private good and (b) for a public good. Once you have derived the market demand curve in each case, introduce a market supply curve and then show the optimal level of production.Consider an economy with a private good and public good. The economyconsists of two consumers whose utility functions are:u1(x1, y) = 1/2 ln x1 +1/2 ln y and u2(x2, y) = 1/3 ln x2 +2/3 ln y.The endowment of consumer 1 is w1 = 2, and endowment of consumer 2 is w2 = 3, both in units of private goods. The production of public good uses the linear technology y = z. 1. Find Lindahl equilibrium.Suppose the marginal cost of a pure public good increases as more is purchased by a community. Prove that the Lindahl equilibrium will result in a budget surplus at the efficient annual output of the pure public good
- Consider agent A with (inverse) demand curve for the public good Pa = 60 - 2Qa and agent B with inverse demand Pb = 90 - 5Qb , where prices are measured in £ per unit. The marginal cost of producing the public good is £10 per unit. What is the Pareto efficient level of the public good? Explain. Illustrate in a graph.Scenario 3 Suppose there are one hundred residents in a neighborhood, and each resident has an identical demand for a public good. The demand for each resident is given by P = 2 - .01Q. If your answer is not a whole number, please make sure to round to the nearest hundredth. Refer to Scenario 3. Find the social demand curve for the public good in this neighborhood. What is the y-intercept of the social demand curve?Suppose that three individuals each benefit from a public good. The marginal cost of the public good provision is fixed at $15 per unit: MC = $15 Whereas each of the three individuals (Person 1, Person 2, and Person 3) each receive a marginal benefit for each unit of the public good defined by: Person 1: MB1= 40 − 2Q Person 2: MB2= 30 − 2Q Person 3: MB3= 31 − Q 1. Draw a figure with all three MB curves, the MC curve, and the Social Marginal Benefit (SMB) Curve. Label all x-intercepts, y-intercepts, and kinks in the SMB curve.2. Given the above MB curves, write down the Social Marginal Benefit Curve as a function of Q. 3. What is the Socially Optimal Choice of Q and would any private individual purchase this on their own? Show your work. Suppose that you are on the town council, and that the town currently has Q = 11 of this public good. You are considering raising money from Persons 1 – 3 in order to buy another unit of Q, where Person 1 pays t1, Person 2 pays t2, Person 3 pays t3 4.…
- Consider the market for flu vaccines, in which consumption causes positive externalities by creating herd immunity. Quantity supplied is given by Qs=2+2*P Marginal Private Benefit (determines individual demand of consumers of the vaccine i.e. the benefit from not getting sick) is given by Qd=60.5-2.5*MBP. Marginal Social Costs (MPC plus the benefits of externalities) is given by Qd=69.5-2.5*MSB. Plot these 3 curves on a graph with 6 points at P=11,12,13,14,15,16. What is the deadweight loss if only free-market forces are at play (i.e. externalities are not considered by the consumers)? How much should the subsidy be to bring the market to efficient equilibrium?Consider agent A with (inverse) demand curve for the public good PA = 60 − 2QA and agent B with inverse demand PB = 90 − 5QB, where prices are measured in £ per unit. The marginal cost of producing the public good is £10 per unit. What is the Pareto efficient level of the public good? Explain. Illustrate in a graph. [Hint: Compute the marginal social benefit of the public good by adding up the demand curves vertically, over the p’s]Question 2 Suppose that three individuals each benefit from a public good. The marginal cost of the public good provision is fixed at $15 per unit: MC = $15 Whereas each of the three individuals (Person 1, Person 2, and Person 3) each receive a marginal benefit for each unit of the public good defined by: Person 1: MB!= 30 − 2Q Person 2: MB"= 20 − 2Q Person 3: MB#= 21 − Q As is the case with public goods, they are non-rival. Therefore, note that each person gains benefit from the total amount of Q purchased by everybody, not just the individual value that they purchase themselves (e.g. Q1, Q2, or Q3). 1. Draw a figure with all three MB curves, the MC curve, and the Social Marginal Benefit (SMB) Curve. Label all x-intercepts, y-intercepts, and kinks in the SMB curve Full explain this question and text typing work only
- Illustrate the efficient provision of a public good regarding partial equilibrium analysis.1. Suppose there is a society with two people who have the following valuations of level y of a public good: v1(y) = 1210√y and v2(y) = 410√y so their marginal benefits are given by 605/√y and 205/√y, respectively. The cost of providing the public good is given by c(y) = 10y. So we have MC(y) = 10. Suppose that their utility is given by u1 = x1 + v1(y) and u2 = x2 + v2(y) , where xi denotes person i’s money (that is not spent on the public good). Further, suppose their wealth/income levels are given by w1 = 500 and w2 = 800. (a) What is the socially optimal level of the public good?Using the above table, fill in the Marginal Social Benefit for a public good based on an economy of these 3 consumers. Consumer A’s price per unit Consumer B’s price per unit Consumer C’s price per unit Marginal Social Benefit QD $Blank 1 1 $11 $12 $15 $Blank 2 2 $9 $8 $12 $Blank 3 3 $6 $5 $9 $Blank 4 4 $5 $1 $5 If this public good has a constant marginal cost (MC) of $20, what is the socially optimal number of units of the public good that should be provided to the economy? Blank 5 units.
