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Benefits from specialization.
a. The benefits of specialization are intended to have a positive impact on the optimal method of procuring an input. The effect of specialization will lead to procurement of best quality inputs at the most cost effective possible way. Thus, benefits of specialization will also provide a comparative advantage to the procurement of inputs.
b. Bureaucracy costs. Bureaucracy costs will make the method of procuring of input to be more time-consuming, dependent on many external factors and thus make it contingent on factors and unreliable. Due to bureaucratic concerns, the costs of input procurement may also rise and there will be a wastage in terms of time, money and efforts directed towards the procurement.
c. Opportunism on either side of the transaction. Ans: The opportunism on either side of the transaction may lead to unjustifiable profits or benefits to one of the parties. However, this will make the input procurement difficult and slacken the relation of trade between the two parties. Thus the optimal method will get affected in terms of the efficiency of work rendered and in many cases, this may also lead to the cancellation of the contract when one party continues its opportunistic behavior against the other party for a considerable time.
d. Specialized investments
Suppose that the current spot rate between Japan and the US is 4 yen per dollar, the forward rate is 4.04 yen per dollar, and the expected future spot rate is 4.06 yen per dollar.
What are some possible explanations of the paradox? How can human capital contribute to the explanation of the paradox?
Which theory is more appropriate for the economy today? Why
Suppose that an oligopolistic ally competitive restaurant is currently serving 230 meals per day (the output where MR = MC). At that output level, ATC per meal is $10 and consumers are willing to pay $12 per meal. What is the size of this firm's p..
Ginger's utility function is U(x, y) = x2y, with associated marginal utility functions MUx = 2xy and MUy = x2. She has income I = 240 and faces prices Px = $8 and Py = $2. a) Determine Ginger's optimal basket given these prices and her income.
Assume the banking system contains Total reserves $80 billion Transaction deposits $800 billion Cash held by the public $100 billion Reserve requirement 0.10 a. Are the banks fully utilizing their lending capacity b. What would happen to the money su..
A linear trend equation for sales of form Qt = a + bt was estimated using yearly sales information for the period 2000 - 2007. The results of regression are given below:
Most restaurant customers tip according to a percentage rule - between 15 and 25 percent of the bill. Diners who have dinner and a $20 bottle of wine usually pay the same percentage of the bottle price as diners who order a $100 bottle.
The Price of Tattoos. According to a market expert, tattooing in your city is a constant-cost industry. The initial equilibrium price is $24.
An increase in the demand for green tea raises the price of apples from $16 a pound to $20 a pound. As a result, quantity supplied increases by 30 percent. Using the midpoint formula, calculate the value of the price elasticity of supply.
Sarah is awake for 100 hours per week. Using one diagram, show Sarah's budget constraints if she earns $6 per hour, $8 per hour, and $10 per hour. Now draw indifference curves such that Sarah's labor supply curve is upward sloping
compute the r and y in which the two markets are clearing.
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