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1. assume a monopolist faces the market demand function P = a - bQ. Its marginal cost is given by MC = c + eQ. Assume that a > c and 2b + e > O.a) Derive an expression for the monopolist's optimal quantity and price in terms of a, b, c, and e.b) Show that an increase in c (which corresponds to an upward parallel shift in marginal cost) or a decrease in a (which corresponds to a leftward parallel shift in demand) must decrease the equilibrium quantity of output.c) Show that when e 2:: 0, an increase in a must increase the equilibrium price.
2. A monopolist serves a market in which the de¬mand is P = 120 - 2Q. It has a fixed cost of 300. Its marginal cost is 10 for the first 15 units (MC = 10 when 0 ≤ Q ≤ 15). If it wants to produce more than 15 units, it must pay overtime wages to its workers, and its mar¬ginal cost is then 20. What is the maximum amount of profit the firm can earn?
3. Suppose that demand and supply curves in the market for corn are Qd = 20,000 - SOP and QS = 30P. Suppose that the government would like to see the price at $300 per unit and is prepared to artificially increase demand by initiating a government purchase program. How much would the government need to spend to achieve this? What is the total deadweight loss if the government is successful in its objective?
Suppose the banking system is in reserve equilibrium. The Fed conducts an open market purchase of Treasury securities in the amount of $1 billion.
If the US population is growing at .88% per year, while GDP is growing at 2.5% per year, and if these growth rates remain constant for the next five years, what will be the population and GDP levels in five years? Please show your work.
The impact of changing from a federal income tax to a federal consumption tax would be:
If the government uses its knowledge of its monopolistic position, Illustrate what criteria will it employ when determining how many soldiers to recruit. What happens if a mandatory draft is implemented.
An rise in a firms expected growth rate would normally cause the firms required rate of return. which of the following statements is most correct.
Illustrtae what should the arbitrageur do. Suppose that the cost of storing gold is zero and that gold provides no income.
Elucidate assumption concerning economies of scale will give rise to a determinant and optimal scale of the firm in Long run equilibrium in perfect competetion.
Explain why is it important for a country to calculate their GDP and release this information to the public.
True/False: For each of the following concepts, decide whether it's true or false, and briefly explain why (2-3 sentences). You can also use diagrams if they are helpful. Each correct answer is worth.
Use aggregate demand (AD) and aggregate supply (AS) model in which the short run aggregate supply curve slopes upwards to describe the equilibrium level of real GDP and prices if the economy is operating:
In a closed economy without a government sector, consumption is determined as 80% of the income available to households. Investment is autonomous at a level of £450.
Assume an economy's real GDP is $30,000 in year 1 and $31,200 in year 2. What is the growth rate of its real GDP?
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