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1. (a) Bagels and cream cheese are often eaten together, so they are complements. Suppose that the equilibrium price of cream cheese has risen but the equilibrium quantity of bagels has fallen. What could be responsible for this pattern - a rise in the price of flour or a rise in the price of milk? Illustrate and explain your answer with demand and supply diagram for bagel
(b) Suppose the government imposes a price floor on the bagel market to maintain bagel producers' income. Briefly explain to government why the policy would yield an inefficient outcome. Use the supply and demand model to illustrate your answer.
2. Boom--Energy is a manufacturer of energy--boosting products. The Board of Boom--Energy has hired you to investigate whether its Horse--Energy Bars and Choco Bars are complementary goods, substitute goods or there is no interdependence between the two goods. Using appropriate economic tools and terminology, explain how you would carry out your investigation.
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“This is a work of microeconomics, in which two scenarios have been chosen for analysis. With the help of the Cross-price Elasticity of Demand, equilibrium price and equilibrium demand of the complementary and substitute goods can be regulated. Governing body has taken Price Floor Model to reduce the excessive goods. Cross Price Elasticity of Demand has been chosen for understanding two situations.”
Explain with illustration the abnormal supply curve
What is the difference between observational and experimental data?
a domestic shoe company distributes running shoes and tennis shoes for 95 per pair. the marginal cost of producing a
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Consider a national income model with the following consumption, investment, and tax functions C = 55 + 0.85YD , T = 20 + 0.05Y , I = 10 + 0.1Y - 8r - What is the numerical values of the multipliers
Using supply and demand diagrams, show how each of the two developments can explain the increase in the compensating wage differential. Can information on the number of workers in the risky occupation help determine which explanation is more plaus..
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Consider an electricity market with a daytime (peak-period) inverse demand of P=160-Q, and a nighttime (off-peak) inverse demand P=80-Q, where P is the price of electricity and Q is units of electricity.
What is an externality? Provide at least three examples. How does one of the examples you provided affect the market outcome? What is the role of government in addressing the implications of an externality you provided as an example?
Consider the fictitious good Derp. The demand for Derp is Q = 1200 - 2P. Suppose the supply of Derp is given by Q = -600 +2P. What is the equilibrium price of Derp? What is the equilibrium quantity of Derp? What is the price elasticity of demand at t..
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Calculate the payback period for each project. Which, if either, of these projects should be chosen? What is the NPV for each project if the appropriate discount rate is 15 percent? Which, if either, of these projects should be chosen if the appro..
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