Number of CDs listened to in a week 1319 53 Reference: Figure 2-5 O % article. O2 articles. 4 O1 article. O3 articles. B -00 Refer to the graph above. Given Vineetstan's production possibility curve of listening to CDs or reading magazine articles in one week, when moving from point A to point B the opportunity cost of listening to each CD in terms of reading articles is: 8 C 12 16 20 24 Number of articles read in a week
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- On a given evening, J. P. enjoys the consumption of cigars (c) and brandy (b) according tothe functionU(c, b) = 20c− c²+ 18b − 3b²a. How many cigars and glasses of brandy does he consume during an evening? (Cost isno object to J. P.)b. Lately, however, J. P. has been advised by his doctors that he should limit the sum ofglasses of brandy and cigars consumed to 5. How many glasses of brandy and cigarswill he consume under these circumstances?Studying has both costs and benefits. If you continue tostudy (e.g., for a test) for as long as the marginal benefitsof studying are greater than the marginal costs, and youstop studying when the two are equal, will your actionbe consistent with having maximized the net benefits ofstudying? Explain your answer.Review the numbers for Canada and Venezuelafrom Table 33.12 which describes how many barrelsof oil and tons of lumber the workers can produce. Usethese numbers to answer the rest of this question.a. Draw a production possibilities frontier for eachcountry. Assume there are 100 workers in eachcountry. Canadians and Venezuelans desire bothoil and lumber. Canadians want at least 2,000tons of lumber. Mark a point on their productionpossibilities where they can get at least 3,000tons.b. Assume that the Canadians specializecompletely because they figured out they havea comparative advantage in lumber. They arewilling to give up 1,000 tons of lumber. Howmuch oil should they ask for in return for thislumber to be as well off as they were with notrade? How much should they ask for if theywant to gain from trading with Venezuela? Note:We can think of this “ask” as the relative price ortrade price of lumber.c. Is the Canadian “ask” you identified in (b) alsobeneficial for Venezuelans? Use the…
- Intermediate MicroeconomicsProblem Set 10.Submission options:⢠in person during lectures or TA sessions;⢠in Xiaoye Liaoâs mail box at 19 West 4th, 6th Floor;⢠(less recommended) e-mail Xiaoye Liao atxl775@nyu.eduâ in that case, be sure to use the subject line: âSubmission Problem Set 10â.Exercise 1Consider a game of rock-scissor-paper. There are two players, player 1 and player 2,and the winner receives $1 from the loser (if they draw, nothing happens). They playthis game simultaneously.1. What kind of game is this? Express this game in normal form.2. What are the set of possible actions and strategies?3. Find all Nash equilibria of this game.Exercise 2Consider a game represented by the following payoff matrix. Find all pure strategyNash equilibria. UMD LCR?10, 0 ?10, ?1 ?10, ?1?8, ?8 0, ?102, ?14, 57, ?101, 1 Exercise 3Consider a game represented by the following…Below is the production possibilities table for consumer goods (maize) and capital goods (tractors):Type of productionProduction possibilities A B C D Emaize 30 27 21 12 0Tractors 0 2 4 6 8i. Show these data graphically. ii. If the economy is at point C, what is the cost of one more unit of maize? iii. Suppose improvement occurs in the technology of producing tractors but not in the technology of producing maize. Draw the new production possibilities curve. iv. Now assume that a technological advance occurs in producing maize but not in producing tractors. Draw the new production possibilities curve. v. Now draw a production possibilities curve that reflects technological improvement in the production of both goods.Anna has endowment 1500 now and 500 later. Internet rate is 2.0%. She prefers smooth consumption to time (i.e., u0=u1=u). a. Assume utility function, u(c)= log c. What are the optimal consumption c0and c1if Anna's beta=1, and she wants to maximize her utility? b. Now assume that the utility function, u(c)=c0.5. If everything else remains the same as Problem 1(a), what are the optimal consumption c0and c1if Anna wants to maximize her utility?
- Alyssa’s Custom Cakes currently sells 4 birthday, 3 wedding,and 2 specialty cakes each month for $45, $155, and $105each, respectively. The cost of labor is $50 per hour (includ-ing benefits) and it takes 90 minutes to produce a birthdaycake, 240 minutes to produce a wedding cake, and 60 min-utes to produce a specialty cake. Alyssa’s current multifactorproductivity ratio is 1.30.a. Use the multifactor productivity ratio provided to calcu-late the average cost of the cakes produced.b. Calculate Alyssa’s labor productivity ratio in dollars perhour for each type of cake c. Based solely on the labor productivity ratio, which cakeshould Alyssa try to sell the most?d. Based on your answer in part (a), is there a type of cakeAlyssa should stop selling?The consumer choice is not restricted to the choice of consumptiongoods. In fact, it can apply to all our decisions that involve trade-offs. Suppose Mary has awage per hour of 10 euros. With her earned income she consumes. That isC=wH per day.She also decides how many hours to work of take leisure time each day.H=24-N, whereHis work and N is leisure. Her utility is given by (picture) Solve for the optimal decision of labor/leisure. Plot the budget constraint and the indif-ferent curve. What is the labor supply function?EXERCISE 1Below is a production possibilities table for consumer goods (Food) and capital goods(Robots):A B C D EFood 0 1 2 3 4Robots 10 9 7 4 01. Show these data graphically. Upon what specific assumptions is this productionpossibilities curve based?2. If the economy is at point C, what is the cost of one more food? Of one morerobot? Explain how the production possibilities curve reflects the law ofincreasing opportunity costs.3. If the economy characterized by this production possibilities table and curvewere producing 3 food and 2 robots, what could you conclude about its use ofavailable resources?4. What would production at a point outside the production possibilities curveindicate? What must occur before the economy can attain such a level ofproduction?EXERCISE 2Explain how (if at all) each of the following affects the location of a country’s productionpossibilities curve:1. The quality of education increases.2. The number of unemployed workers increases.3. A new technique…
- 13. A layperson says that a proposed government project simplycosts too much and therefore shouldn’t be undertaken.How might an economist’s evaluation be different?14. Economists say that individuals make decisions at themargin. What does this mean?15. How would an economist define the efficient amount oftime spent playing tennis?16. Ivan stops studying before the point at which his marginalbenefits of studying equal his marginal costs. Is IvanMatch each diagram in Figure 1 with its description here.Assume that the economy is producing or attempting toproduce at point A and that most members of society likemeat and not fish. Some descriptions apply to more than one diagram, and some diagrams have more than onedescription.a. Inefficient production of meat and fishb. Productive efficiencyc. An inefficient mix of outputd. Technological advances in the productionof meat and fishe. The law of increasing opportunity costf. An impossible combination of meat and fishThe president of LeTall University, President John, spends $30 per week on pizzas (qz)and beers (qb). At LeTall Pizza, his go-to pizza joint, pizza costs $3 per slice and beeralso costs $3 per can. Assume fractions of the goods are allowed.(a) Draw President John’s budget line (qb on the horizontal and qz on the vertical axis).(b) President John receives a coupon from LeTall Pizza. The coupon, which will expirein a week, allows him to buy a can of beer at a discounted price of $1 per can. Itis, however, only good for a dozen cans of beer. Draw President John’s budget lineunder the coupon. Label any critical points on the budget line.(c) In another week, LeTall Pizza offers a special deal for pizza. For every half dozenslices of pizza bought during the week, one can get two additional slices for free.Draw President John’s budget line under the special deal. Label any critical pointson the budget line.