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Tots-R-Us operates the only day-care center in an exclusive neighbourhood just outside of Washington, D.C. Tots-R-Us is making substantial economic profit, but the owners know that new day-care centers will soon learn of this high profitable market and attempt to enter the market. The owners decide to begin spending immediately a rather large sum on advertising designed to decrease elasticity. Should they wait until the new firms actually enter? Explain how advertising can be employed to allow Tots-R-Us to keep price average above cost without encouraging entry.
Essay on Market imperfection associated with negative externalities.
Questions on Long-Run Labor Demand and Factor Substitutability, Own-price elasticity, Cross-price elasticity
Why might it be difficult for the Fed to formally adopt inflation targeting? Would inflation targeting be a good policy for the Fed in the present economic environment
The questions posed are broad and open ended so be careful to allow yourself enough research and planning time.
Question based on Derive and compare demand curve, Derive Ambrose's demand function for peanuts. How does it compare with Johnny's demand curve for peanuts?
Obtain the market clearing price and quantity. Under the assumption of profit and maximization , how much output should the representative firm produce?
Problem - Income Elasticity of Demand, Interpret the following Income Elasticities of Demand (YED) values for the following and state if the good is normal or inferior; YED= +0.5 and YED= -2.5
Describe the Soviet Rapid Development Model
How will a fall in domestic investment affect the trade surplus and net capital outflows in the domestic economy, the trade deficit and capital inflows in the rest of the world.
Perfect competition guarantees allocative efficiency. A profit-maximizing monopolist can never be allocatively efficient.
Consider the problem of the book assuming that the utility is Cobb-Douglas (U (C, l) = C α l β )
What is Bill's opportunity cost of producing one hat, In which of the two activities does Mary have a comparative advantage.
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