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Assume that the daily demand for packs of cigarettes in the tobacco-addicted nation of Pcoria is Q=100-P
Further assume that the marginal cost of producing a pack of cigarettes is $6, and that the market for cigarettes is perfectly competitive. Assume that each pack of cigarettes smokes does $6 worth of health damage to the smoker in the form of increased cancer risk and a total of $5 worth of health damage to the smoker's neighbors via secondhand smoke. Finally, assume that all Pcorian cigarette consumers are aware of these costs.
a.) Assume that a Pcorian smoker named Jay states that he is willing to buy a pack of cigarettes for $8, but not a penny more. In this market, where the price is $6 per pack, what are the private benefits and private costs incurred whenever he buys a pack of cigarettes? Is it privately efficient for him to buy a pack of cigarettes at this price?
b.) What about the public benefits and public costs? Is it socially efficient for him to buy a pack of cigarettes at this price?
c.) Suppose that, due to the introduction of a hyper-effective tobacco fertilizer, the cost of producing a pack of cigarettes plummets to $1. Now is it socially efficient for Jay to purchase a pack of cigarettes?
If it is estimated that the checking account (demand) deposits at the chartered banks are $500. Using the above information, calculate M1, and money multiplier (m).
Then, in the year after the 10 payments are made, you will receive 10 annual payments of $500 each. Your personal discount rate is 7.5%. Should you purchase the insurance product?
In oligopoly, each firm is acutely aware of the production and marketing decisions of all competitors and carefully considers the potential competitive reactions in all decisions. Discuss whether firms in other market structures consider the potentia..
Using a market or industry as an example, explain how the Prisoners' Dilemma game helps explain observed (real-world) behavior among oligopolistic firms.
In turkey, many shopping mall owners charge different rental rates on their tenants. The shops of local and relatively unknown brands pay higher rental rates per square meter than the international and famous brand shops. Local shop owners protest th..
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Sam purchased a five-year Treasury note with a $1,000 face value and a 7.5% coupon rate. Using the Excel spreadsheet, calculate the coupon payment Sam receives if he purchases a five-year Treasury note. To do this, first enter the appropriate coupon ..
Explain how, despite being free, public education can actually make a household better off by consuming less education?
In 2005, Clear Channel (an owner of popular radio stations) spun off concert promoter Live Nation into an independent company. How would this affect prices for concert tickets or rates for radio programming?
Suppose that the government decides to tax potato chip producers for every bag of chips sold. Before the tax, 100 million bags of potato chips were sold every year at a price of $3 per bag. What is the amount of the tax per bag of potato chips? What ..
Describe at least four characteristics of a good business.Identify and talk about at least four companies that you regard as having the characteristics.
What are the necessary conditions for economic efficiency? In what four situations might a market fail to achieve ideal economic efficiency?
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