Using the (graphical) two-period model for a nonrenewable resource, analyze the effects of the following on equilibrium prices and quantities in the market for that resource: An increase in the interest rate Choose all that apply P, - MEC P, - MEC 1+r 9 1. 01 increases, Q2 Decreases 2. P1 and P2 fall O 3. 01 decreases, Q2 increases 4. O 4. P1 increases, P2 decreases UESTION 7 Using the (graphical) two-period model for a nonrenewable resource, analyze the effects of the following on equilibrium prices and quantit in the market for that resource: An increase in second-period population Choose all that apply P, - MEC P, - MEC 1+r Q Q. - 1. 01 decreases, P1 increases O 2. 02 increases, P2 increases O 3. 01 increases, P1 decreases O 4. 02 decreases, P2 increases

Using the (graphical) two-period model for a nonrenewable resource, analyze the effects of the following on equilibrium prices and quantities in the market for that resource: An increase in the interest rate Choose all that apply P, - MEC P, - MEC 1+r 9 1. 01 increases, Q2 Decreases 2. P1 and P2 fall O 3. 01 decreases, Q2 increases 4. O 4. P1 increases, P2 decreases UESTION 7 Using the (graphical) two-period model for a nonrenewable resource, analyze the effects of the following on equilibrium prices and quantit in the market for that resource: An increase in second-period population Choose all that apply P, - MEC P, - MEC 1+r Q Q. - 1. 01 decreases, P1 increases O 2. 02 increases, P2 increases O 3. 01 increases, P1 decreases O 4. 02 decreases, P2 increases

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter17: Capital And Time

Section: Chapter Questions

Problem 17.2P

See similar textbooks

Similar questions

Consider the two-period model. The consumerís preferences over current and future consumption (c and c 0 ) are: REFER TO IMAGE FOR NEXT STEP (a) Find lifetime wealth, we. (b) Set up the Lagrangian and FINDd the optimal levels of current consumption (c), future consumption (c') and saving (y-t-c) c) Confirm that the allocation you found in part (b) is in fact optimal, by completing the following table. refer to second image
Need answer. Absuletly upvote!! A. Graphically derive the IS curve from the goods market equilibrium. Hint: start from equilibrium in goods market and the analyze the effect of a change in interest rate i on Y.
Derive the relationship between MPL and MC algebraically. Why is this relationship critical to showing how the law of diminishing returns affects our expectations regarding SR costs?
Suppose the cotton (a storable commodity) futures prices are currently Expiry Month Price c/lb December 2021 83 December 2022 96 (a) Is the cotton market in contango or in backwardation? (b) What is the slope of the futures curve for cotton? Draw a future curve graph to support your answer. (c) Are there positive returns to storage between Dec 21 and Dec 22? Draw a graph of supply and demand for storage to support your answer (where t=Dec 21 and t+1=Dec 22).
There are some simplifying assumptions in order to generate simple expressions. One of these assumptions is that r (interest rate) = ρ (rate at which household discounts future). Suppose we relaxed this assumption (i.e. allowed r to differ from ρ). Two results of the model are: i) The household keeps the expected value of consumption constant over time. ii) The household responds differently to permanent versus temporary income changes. Discuss the implications of allowing r to differ from ρ on each of these results
Please help me to solve this. Stowe Automotive is considering an offer from Indula to build a plant making automotive parts for use in thatcountry. In preparation for a final decision, Stowe’s economics have been hard at work constructing a basic econometricmodel for Indula to aid the company in predicting future levels of economic activity. Because of the cyclical nature ofthe automotive parts industry, forecasts of future economic activity are quite important in Stowe’s decision process. Corporate profits (P t-1 ) for all firms in Indula were about $100 billion. GDP for the nation is composed ofconsumption C, investment I, and government spending G. It is anticipated that Indula’s federal, state, and localgovernment will spend in the range of $200 billion next year. On the basis of an analysis of recent economic activity inIndula, consumption expenditures are assumed to be $100 billion plus 80 percent of national income. National incomeis equal to GDP minus taxes T. Taxes are…
1. Why is the interest rate irrelevant in the one-period general equilibrium model? What is the mechanism for the interest rate affecting labour supply in the two period model?
Consider the two-period household-maximization model discussed in class. The model is modified in order to look at applications including credit constraints, interest-rate markups, and taxation. A representative household lives for two periods and maximizes utility of consumption in period 1 and in period 2. The utility is represented by log(c) where c denotes consumption. Assuming no discounting between period 1 and period 2. The maximization problem for the representative household can be written as below (see image): Question: Show consumption c1 and c2 (you can use algebraic or graphical methods). In theanswer, you should discuss whether a1 ≥ 0 or a1 < 0 and provide an economic interpretation.What determine(s) the sign of a1 and why?
a. List all the equilibrium conditions of this model and Using the equilibrium conditions listed, write down an expression that describes the evolution of the aggregate capital stock, Kt over time. Briefly explain why this expression is not particularly convenient for our analysis of the model? b.Using your answer to the above question, derive the equation that describes the evo- lution of the the capital stock per effective unit of worker, kt. ' Why is the analysis in terms of the variables per effective unit of worker more useful than the one with the aggregate capital stock? c. Assume that a E (0, 1). Draw a diagram that describes the evolution of kt, and show that there exists a unique steady state, k* > 0. Label properly. Find the expressions for the steady state variables k*, y*, and c* in terms of the parameters of the model. , Now, assume that α = 1. Draw a diagram that describes the evolution of kt, and show that income per worker can grow indefinitely in this case. Label…
Let the equilibrium condition for national income be ?(?) + ?(?) = ?(?) + ? (? ′ , ? ′ ,? ′ > 0; ? ′ + ? ′ > ? ′ ) Where S, Y, T, I and G stand for saving, national income, taxes, investment and government expenditure respectively. All derivatives are continuous a. Interpret the economic meaning of the derivatives ? ′ , ? ′&? ′ b. Check whether the conditions for the implicit function theorem are satisfied. If so, write the equilibrium identity c. Find ??̅ ?? and discuss its economic implications
Specific Subject: Macroeconomics - Basic Neoclassical Model This problem indicated At (exogenous variable represents as Technology as looks at Cobb-Douglas production functions). This problem indicated At (exogenous variable represents Technology as can be seen in various Cobb-Douglas type production functions).Then, the objective is to model 2 graphs considering 2 labour offers - one relatively elastic and the other inelastic -, and to analyse the effects of variables such as Yt (output), rt (interest rate), wt (nominal wage) and Nt (labour) and how they are impacted by these offers and thus explain what happens to the real wage. This problem was sent 2 times, but due to the complexity it was rejected. I urgently need a resolution.
Josh is playing blackjack for real money. He has reference-dependent preferences over money: if his earnings are m and his reference point is r, then his utility is v(m − r), where the value function v satisfies v(x) = ln(x + 1) for x ≥ 0, and v(x) = −2 ln(−x + 1) for x ≤ 0. assume that Josh’s reference point is 0 Euro (that is, no wins or losses) and for the given situation, answer the following questions: (i) What is the g for which Josh would be indifferent between taking a fifty-fifty win g Euro or lose 5 Euro gamble? (ii) Does this reflect risk loving or risk averse behavior? (iii) What feature of Josh’s reference-dependent preferences is driving this choice?