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A consumer purchases two goods, X and Y, which are perfect complements. In other words, the goods are only beneficial when consumed together. (For example, think of X as left shoes and Y as right shoes.) Therefore the consumer gains no extra benefit from additional units of X in excess of the number of units of Y he has (and vice versa). As such, the consumer's indifference curves look like this:
a. The consumer has $120 to spend, the price of a unit of X is $5, and the price of a unit of Y is $10. How many units of X and Y does the consumer purchase?Since the two goods are only beneficial when consumed together (any unit of X that does not have an accompanying unit of Y is useless to the consumer, and vice-versa), the consumer will only buy the goods in pairs.
b. The price of X increases to $10. How many units of X and Y does the consumer purchase now? How much additional income would the consumer need to reach the prior level of utility at the new prices? How much income could the consumer sacrifice to hold the old prices constant, while reaching the same utility as at the new prices?The compensating variation for a policy is the amount of money the consumer could pay and still be as well off after the price increase as he was before (i.e., the amount he would be willing to pay as compensation for having the policy enacted). How much less money does he need to be able to buy 8 pairs (his initial consumption) but at the new price ($20 per pair)?
A State and explain 5 factors which affect the foreign exchange value of the Irish currency (Euro). B Irish exports have risen, in recent years. Discuss the effects of this development on each of the following: (1) The amount of borrowing by the Iris..
Illustrate what is the likelihood of a second industrial revolution in underdeveloped countries today.
Illustrate what most people do not realize is that what the Fed is actually doing is changing money supply (and not interest rates directly). When money supply changes, interest rates automatically adjust to keep the money market in equilibrium.
The firm provides the equipment and supplies necessary to do the work. It also supervises the workers on the clients' premises. Client A reserves the right to direct the staffing firm workers to perform particular tasks at particular times or in a..
Currently the state of ohio imposes no sales tax on food products in grocery stores. Suppose that the government passed a bill to impose a $0.6 sales tax for each gallon of milk on consumers.
Calculate a perpetual equivalent annual cost (year 1 through infinity) of $5 million in year 0, $2 million in year 10 and $100,000 in year 11 through infinity. Use an interest rate of 10% per year.
Jim Duggan made an investment of $10,000 in a saving account 10 years ago. This account paid interest of 5½% for the first 4 years and 6½% interest for the remaining 6 years. The interest charges were compounded quarterly.
The firm currently uses 50,000 workers to produce 200,000 units of output per day. The daily wage per worker is $80, and the price of the firm's output is $25. The cost of other variable inputs is $400,000 per day
Illustrate what are some of the considerations in term of opportunity costs that you would have to include in arriving at your decision?
Over the past decade, many media articles have discussed the topics of "Coutsourcing" and "Cemerging markets", voicing concerns about U.S. deficits and debt and the impact on the U.S. dollar
Two principles of economics that help describe how wages are determined in a market economy, Think these principles when completing the project. Think of how they apply to labor market for nurses.
When the Federal Chairman, Ben Bernake, announces a change in the interest rate, does the Federal Reserve directly or indirectly change interest rate? explain.
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