Consumption of gold offers people marginal utility

Assignment Help Business Economics

Reference no: EM131169619

Suppose the consumption of gold offers people a marginal utility that diminishes as that person consumes more gold. Assume also that gold can be mined in unlimited amounts at the constant marginal costs, X (or chi), units of the nongold consuption good. a) can the trading value of gold exceed X in equilibrium? Explain. What is the effect on gold consumption and mining of an increased use of gold as money? b) Suppose instead that the marginal mining cost increases with the amount mined. What is now the effect on gold consumption and mining of an increased use of gold as money?

Reference no: EM131169619

Questions Cloud

Large concessions from employees and avoided bankruptcy : Large airlines have enormous fixed costs. Their business after the attack of September 11, 2001, was dismal. US Air and United declared bankruptcy. American obtained large concessions from employees and avoided bankruptcy (until 2011). Your written c..

Accounting profit and economic profit : John passes up an offer for a job paying $50,000 a year and, instead, starts his own business. His new business brings in $160,000 in sales during the first year, and his total costs for items such as materials, labor, equipment, shipping, and insura..

Microeconomic consequence of inflation : Which of the following is a microeconomic consequence of inflation?

Recital of international employment conditions : Kevin Quinn was a 60-year old engineer who had worked for Mongo Project Corporation for thirty years. Quinn was approached by Mongo to work as manager of engineering on the Jumbo Project, a two-year project constructing an industrial city in Saudi Ar..

Consumption of gold offers people marginal utility : Suppose the consumption of gold offers people a marginal utility that diminishes as that person consumes more gold. Assume also that gold can be mined in unlimited amounts at the constant marginal costs, X (or chi), units of the nongold consuption go..

What is your utility maximizing consumption : A banana gives you 10 utility. Each subsequent banana gives you 1 less utility. An apple gives you 10 utility. Each subsequent apple gives you 2 less utility. A banana costs $4, and apple cost $2, your income is $16. What is your utility maximizing c..

Fed action increase or decrease the money supply : Suppose that the reserve requirement ratio is 4% and that the Fed uses open market operations (OMO) by BUYING $200 million worth of Treasury securities. Assume that banks use all funds except required reserves to make loans and that the public does n..

What is the slope of the curve : Consider the following model: C=20+0.5(Y-T) I=20-10r T=0 G=50 QUESTIONS: a) Obtain the equation of the IS curve. What is the slope of the curve? Calculate output if r=0.1 b) Suppose now that autonomous consumption increases to 30. What happens to the..

Global and domestic macroeconomics : We know the following about a country called Fribonia: Co=10,000 C1=0.8 T=10,000 Tr=2,500 G=7,500 I=5,000 QUESTIONS: (a) Formulate the corresponding macroeconomic model identifying each of its equations.

User Account

All Pages