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Consider two firms: a yoga studio and a bar. The bar produces noise which reduces the price that the yoga studio can charge from its customers.
(a) Assume that the bar can sell an unlimited amount of drinks at the market price p and its marginal cost increase in the quantity of drinks. Assume further that the marginal damage to the yoga studio is a constant amount x per drink. Draw the demand curve of the bar, the marginal cost per drink, the marginal external cost, and the marginal social cost. Indicate in the graphic the quantity of drinks in the competitive market equilibrium and the welfare-maximizing quantity of drinks.
(b) Explain why the welfare-maximizing quantity of drinks is welfare-maximizing.
Advise Steve whether he will able to rely upon his insurance policy. Support your answer with relevant cases and legislation.
Using the data provided above, determine if the Hernandez Corp. is using a cost minimizing combination of inputs. Explain your answer/show your work. If your answer is no, how should the input combination be adjusted?
Elucidate what is meant by the paradox of mercantilism. Explain how was this reflected in mercantilist wage and population policies.
Two methods of filling cereal boxes are being compared. Both methods fill the box with the same amount of cereal on average so the company wants to select the method with the lower variance. In a sample of 31 boxes filled using method 1, the standard..
q1. if the economy currently has a frictional unemployment rate of 2 percent structural unemployment of 2 seasonal
Andrew has decided to open an online store that sells home and garden products. After searching around, he chooses the software company Initech to provide the software for his website since their product required the least amount of specialized inves..
How should a monopsonist decide how much of a product to buy? Will it buy more or less than a competitive buyer? Explain briefly.
Suppose the firms compete in quantities. If firm 1 deviates from collusion in one period, what is the profit of firm 1 in that period in subsequent periods.
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By what percentage would GDP be boosted if the value of the services of stay-at-home spouses were included in GDP
Suppose both Smith and Jones utility functions of U(X,Y) = XY1/2. Smith is endowed with (X, Y) = (9,25) and Jones is endowed with (X, Y) = (25,9). Draw an Edgeworth box with indifference curves through this endowment.
Draw the pre-intervention optimized supply and demand equilibrium. Explain and show what effect it has on the polis.
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