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There are two types of workers, "quicks" and "slows." Productivity equals 2 for quicks, and 1 for slows. λ (between zero and one) equals the fraction of workers who are slows in the population. Workers may invest in a signal of their ability (a credential of some kind) before applying for jobs, at cost ½•y for quicks, and cost y for slows. All firms pay workers their productivity (if there is signaling), or their expected productivity (if there is no signaling). Workers are employed for only a single period after being hired. For what values of λ and y will signaling occur (a separating equilibrium)? For what values of λ and y will signaling not occur (a pooling equilibrium)? Briefly explain. Hint: remember the concept of Nash Equilibrium from your economics classes and employ it here. For signaling to work, each quick and slow must have no incentive to change their behavior individually, given that others are not changing their behavior.
Even though both monopolists and competitive firms follow the MC = MR rule in maximizing profits, there are differences in the economic outcomes because the pure competitor cannot make any economic profit.
Inflation is at 1.2% and relatively stable at the level. The GDP is at $13.6 trillion. Assume that you are on the Council of Economic Advisors which is the group that advises the President on economic policy issues.
Google rejects the idea that it's in the search advertising business, an industry in which it holds more than a 70 percent share of revenue. Instead the company says its competition is all advertising, a category broad enought..
For each of points 'a', 'b', 'd' and 'e' on the graph, calculate the price elasticity of demand (PED) and state the nature of elasticity (e.g. perfectly inelastic) at that point.
Ipads and laptops are substitutes. Use a supply and demand to show what happens to price, quantity, consumer surplus, and producer surplus in the market for laptops (after a technological advance has reduced the cost of making Ipads).
Mathew's utility function implies that the marginal utility of apples is 0.5vX/Y and the marginal utility of hotdogs is 0.5vY/X . How many apples and hotdogs will Mathew buy?
What is the short-run effect on the exchange rate of an increase in domestic real GNP, given expectations about future exchange rates? i. Explain why exchange rate overshoots when money supply increases in the short run.
How big will that budget have to be before he would spend a $1 buying a first cup of coffee?
For a firm in a perfectly competitive market that faces a market price of $5/unit for its output, draw a diagram showing a U-shaped long run Average Cost curve and the related Marginal Cost curve so that, in the situation you show
Suppose that the most popular car dealer in your area sells 10 percent of all vehicles. If all other car dealers sell either the same number of vehicles or fewer, what is the largest value that the Herfindahl index could possibly take for car deal..
A pharmaceutical company has hired you to perform an economic analysis on a currently ongoing project. Experts from the company have estimated the market for the drug and thus the potential revenues for the drug are knows, but the relevant costs a..
Is the federal funds rate currently too high or too low, Suppose that a year has gone by, output is now just 1 percent above potential, and the inflation rate was 1.5 percent over the year. What federal funds rate should the Fed now set (assuming tha..
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