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Consider the utility-maximizing model in a two-good world, where our representative consumer has well-behaved preferences that result in smooth indifference curves that are convex to the origin. Place good one on the horizontal axis. (Assume I=$120 and P1=$3 and P2=$4 a. Illustrate utility maximization where the consumer purchases positive quantities of both goods. b. Show the effect a $2 excise tax levied on good one has on the consumer’s utility-maximizing bundle (assume the $2 tax results in a $2 increase in price). c. Assume consumers purchase 10 units of good one with the $2 excise tax. Rather than imposing the excise tax, the government could levy a $20 income tax, and raise the same tax revenue. Compare the effects the income tax and the excise tax have on the consumer’s utility. Under which plan (excise or income tax) is utility higher? Provide a graph and explain your finding. d. Compare your answer in part c, with the case where goods one and two are perfect complements. Illustrate and explain your answer.
Do you think that Business practices in an Islamic country are likely to differ from Business practices in the United States? If so, how? Recognize why many economics believe that unrestricted free trade between nations will raise the economic welfar..
Compute the percentage change n nominal GDP, real GDP, and the GDP deflator n 2009 and 2010 from the percentage year. For each year, identify the variable that does not change?
Compute the profit maximizing output produced by each firm. Compute the profits earned by each firm and the cartel.
Scarcity underlies the need for an economic system of any type. What is scarcity? Is it possible to ever eliminate scarcity? In what two ways could an economy try to eliminate scarcity? Will these attempts ever be successful?
Give two conditions that are important to the efficient market theory. List one implication of the efficient market theory.
"Market Entry and Monopolistic Competition" Please respond to the following: From the e-Activity article, describe your position on whether or not Apple is stifling competition and monopolizing the tablet market.
You need both equations and clearly labeled graphs. Assume that b=1/2 and that initially the real interest rate is equal to the marginal product of capital at 3%. As well, assume that v=2 and that the inflation rate last period was 2%. Assume the nat..
consider a supplier of agricultural equipment who is deciding how much of two products should be produced by his
Discuss the relationship between shoe brands P and N, and also the type of good that shoes P can be classified as and discuss the meaning of R-square and the t-value for the parameter estimate on the Pp and PN.
when advanta corp. decided that it wished to begin charging a fee to holders of its credit cards for periods during
What will be the profit maximizing prices and the firm's profit, if the proposal of the marketing manager is accepted and calculate the profit maximizing price of the full package? What is the firm's profit in this case
A manufacturing rm spends $500,000 annually for a required safety inspection procedure on its production lines. A new monitoring technology would enable the company to eliminate the need for such inspection.
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