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Linda loves buying shoes and going out to dance. Her utility function for pairs of shoes, S, and the number of times she goes dancing per month, T, is U(S, T) = 2ST, so MUs=2T and MUT=2S. It costs Linda $50 to buy a new pair of shoes or to spend an evening out dancing. Assume that she has $500 to spend on clothing and dancing.
a.What is the equation for her budget line? Draw it( with T on vertical axis), and label the slope and intercepts.
b.What is LindaÂ’s marginal rate of substitution? Explain.
c.Solve mathematically for her optimal bundle. Show how to determine this bundle in a diagram using indifference curves and budget line.
If leisure is a normal good, the Laffer Curve can have an inverted U-shape only if leisure and consumption are (at least at some point) sufficiently substitutable such that the substitution effect (on leisure) outweighs the wealth effect (on leisu..
This is not a goal of government programs To enforce private property rights ,To prohibit natural monopolies or else.
(Functions of Money) "If an economy had only two goods (both nondurable), there would be no need for money because exchange would always be between those two goods." What important function of money does this statement disregard?
Let the demand curve for a good be given by P=60-Q. Also, suppose that the marginal and average cost of producing the good is MC=AC=20. For this demand curve, MR=60-2Q. Find the competitive and monopoly quantities and price.
Your report should be approximately two pages in length, you should use diagrams wherever appropriate and clearly state any assumptions underpinning your analysis.
Assume that the government imposes a $20 minimum wage. Find the new quantity of labor demanded and supplied.
Suppose a profit-maximizing monopolist is producing 800 units of output and is charging a price of $40 per\ unit.If the elasticity of demand for the product is -2, find the marginal cost Of the last unit produced.
What would be the effect of each of the following on the supply of salsa in the United States? In each case, identify the responsible determinant of supply.
In our treatment of the Ricardian model We have focused on the case of trade involving only two nations. Assume that there are many nations capable of producing two goods
What is the effect of an increase in the quantity of money What is the difference between real variables and nominal variables Are these variables affected by the quantity of money If so, how Use examples from the text, the South University Online..
During 1993 when the economy was growing very slowly, President Clinton recommended a series of spending cuts and tax increases designed to reduce the deficit. These were passed by Congress in the Omnibus Budget Reconciliation Act of 1993.
The profitability of the leading cola syrup manufacturers, PepsiCo and Coca Cola, and of the bottlers in the cola business is different. PepsiCo and Coca Cola enjoy 81 operating profit as a percentage of sales; bottlers experience only 15 operatin..
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