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Consider a corrupt provincial government in which each housing inspector examines two newly built structures each week. All the builders in the province are unethical and want to increase their profits by using substandard construction materials, but they can’t do that unless they can bribe a housing inspector into approving a substandard construction materials, but they can’t do that unless they can bride a housing inspector into approving a substandard building. a) If bribes cost $1,000 each, how much will a housing inspector make each year in bribes? b) There is a provincial construction supervisor who gets to hire all of the housing inspectors. c) Corrupt officials may have an incentive to reduce the provision of government services to help line their own pockets. d) What if reducing the number of inspectors from 20 to 10 only increased the equilibrium bribe from $1,000 to $1,500?
Suppose the world price of cotton rises. The demand for labor among cotton-producing firms in Texas will (increase or decrease). The demand for labor among textile-producing firms in South Carolina for which cotton is an input will (increase or decre..
Two common drawbacks of Pigouvian subsidy mentioned in the literature are related to monetisation and measurement of social cost (Baumol) and reciprocity of social cost (Coase). What alternatives to Pigouvian taxes are proposed in the literature? Hav..
q.representative consumers have the utility function ucls lnc ln1- lsrepresentative consumers have labor endowment of
Your firm faces considerable revenue uncertainty because you have to negotiate contracts with several customers. You forecast a 20 percent chance that your revenues will be $200,000, a 30 percent chance that your revenues will be $300,000, and a 50 p..
Consider a public project to build a bridge. The government is deciding whether to undertake it or not. Let k = 1 if the bridge is built and k = 0 if the bridge is not built. The cost of building the bridge is C = 97. Assume the government knows θ. F..
Derive the LM curve when the money supply increases by 500. Derive the LM curve when money supply decreases by 10%. Find the value of money demanded when income Y = 15,000 and interest rate R = 5. Is this equilibrium? Why? Why not?
Assume the U.S. is a SMALL OPEN economy and the European Union is a LARGE OPEN economy. In addition, suppose the EU cuts tax rates and increases infrastructure spending. Assume the U.S. is a small open economy and has balanced trade. Suppose Congress..
You believe that next year there is 50% probability that your health care cost will be $5,000 but your spouse believes you will all be healthy and there will be no healthcare cost; however you both agree to buy an annual health insurance plan. You de..
Dwight and James are looking at these 2 jobs and will make choices. Job B looks more attractive by using simple arithmetic in a static world; but since these will occur in different periods, we know that the best way to evaluate each one is by gettin..
Suppose that in a year an American worker can produce 100 shirts or 20 computers and a Chinese worker can produce 100 shirts or 10 computers. Who has the comparative advantage in the production of shirts? What about for computers?
q1. when corporate income taxes are assumed to exist modigliani miller and the traditional theorists agree that capital
q.an entrepreneur wants to undertake a project which generates future revenue of 34 or 9 and requires an initial cost
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