Q=AE, Q AQ 1 = AE =C+I+G + Xn, 1 - C = Ca + mpc Q mpc 1 m pc I= 100, G = 200, Ca = 100, Xn=-100, (C₁ + I +G + X ₁ ) a n ·A (C₂ + I + G + X ₁ ) a n mpc = 3/4

Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter20: The Problem Of Adverse Selection Moral Hazard
Section: Chapter Questions
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29. Given this model, what is the equilibrium level of income?

Q=AE, AE = C+I+G+ Xn,
1
Q
AQ
1
=
-
m pc
C = Ca + mpc Q
(C₁ + I + G + X ₁ )
a
n
·A (C ₂ + I + G + X ₁ )
a
n
1 m pc
I= 100, G = 200, Ca = 100, Xn=-100, mpc = 3/4
Transcribed Image Text:Q=AE, AE = C+I+G+ Xn, 1 Q AQ 1 = - m pc C = Ca + mpc Q (C₁ + I + G + X ₁ ) a n ·A (C ₂ + I + G + X ₁ ) a n 1 m pc I= 100, G = 200, Ca = 100, Xn=-100, mpc = 3/4
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