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Carbon tax: Suppose the government imposes a carbon tax on oil production. Will this affect the supply or the demand for gasoline? Why? Which determinant of demand or supply is being affected?
Explain why when using the expenditure method for determining GDP do we not include expenditure on intermediate goods, but when using the income method, we use the income of factors of production for both intermediate and final goods production?
Explain what is meant by the principal agent problem, and relate it to shirking. What are the different pay incentive plans that correct for shirking on the job? How does profit sharing reduce shirking? What is the reason for efficiency wages?
Sam promises to pay Sandy $2,000 in four years and another $3,000 four years later for a loan of $2,000 from Sandy today. What is the interest rate that Sandy is getting? Assume interest is compounded monthly.
(Tragedy of the commons) Imagine that two fishermen operate in a lake. We denote the quantity fished by fisherman 1 as q1 and the quantity fished by fisherman 2 as q2. Each player can sell each unit of fish they get by the constant market price p (ta..
he perfectly competitive form maximizes profits by producing 10 units of output. At what price does it sell these units.
Find out the real rate of interest earned by Albert in each of the three years and his total real return over the three-year period. Assume that interest earnings are reinvested each year and themselves earn interest.
Compute the equilibrium level of income, the size of the multiplier, and the change in equilibrium income for an increase in autonomous consumption of $50 million. Suppose the entire economy contains $5000 worth of one-dollar bills. If people fail to..
How responsive do you think consumers will be to the price change when these fluctuations occur due to changes in supply? Why? Use the various determinants of elasticity to explain your answer. How does the price elasticity of demand for gasoline imp..
What is the capitalized equivalent amount worth, at 8% annual interest compounded semi annually, for a present initial cost investment of $50,000, a series of semi annual positive disbursement of $5,000 that extent to infinity, and in 12 years there ..
Why is the price elasticity of demand a relative measure? That is, why is elasticity measured in percentage terms rather than absolute terms?
"Consider the following statement: "Employers should be able to replace permanent workers during a strike." Do you agree? Explain why."
A company decides to offer an average annual raise of 8%, although the current inflation rate is 10%. Each engineering manager decides on the best way to distribute the salary increase to his/her staff. However, if everyone gets an increase of 8%, th..
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