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Question 1) A consumer must decide how much of a good to consumein period 0 and period 1, co and c1 respectively. Goods not consumedin period 0 become capital, k1, and are used to produce more goodsin period 1. There is an initial amount of capital, k0, that producesgoods in period 0. The production function is f(kt) = kαt Each periodthe consumer gets a utility that depends on consumption in that periodgiven by u(ct) = log ctfor t = 0, 1. The consumer's objective isto maximize the discounted expected utility. Solve the maximizationproblem faced by the consumer.(1) maxco,c1log co + β log c1s.t. co + k1 ≤ kαoc1 ≤ kα1co ≥ 0, c1 ≥ 0Question 2) A price taking firm has a production function given byf(K, L) = K.25L.25. The price of output is normalized to 1, and theprices of L and K are w and r. Find the profit maximizing amountof K and L and verify that the second-order conditions or sufficientconditions are satisfied.
Suppose that P1=10 and Q1=20; P2=20 and Q2=10. Suppose that price elasticity of demand is -1 for P=4, Q=10. Calculate marginal revenue for this point on the demand curve. Suppose price elasticity of demand is equal to -2 at a price of 4. If you incre..
Consider a firm with a production function F(l, k) = l^{\frac{3}{4}} k^{\frac{1}{4}} , who faces input prices w = 2 and v = 54. Find the long run cost total cost when q=540. Find the short run cost total cost when q=540 and k is fixed at 16. Find the..
If this economy were an open economy with a flexible exchange rate, would the usual crowding out forces be supplemented or offset by forces from the international sector
Create two separate graphs that show current changes in equilibrium interest rates using the MD and MS curves. Describe the following: The Fed's actions to fight recession, The Fed's actions to lower inflation. Describe the transmission process of mo..
Elucidate the concept of the opportunity cost. your answer could consider opportunity cost in the context of the production possiblity curve.
q1. the demand for tulips in delft holland is estimated by the following linear regression asqd125-15p5ywhere y is
In february 2014, hostilities escalated between Russia and Ukraine over Crimea. Predict the effects of these hostilities on the exchange rate between the U.S. dollar and the Russian Ruble? which now find themselves more competitive with Western impor..
For the product is charging the most favorable price
Answer the following questions about Keynesian vs. Classical view of economics. Marginal propensity to consume (MPC) is the slope of the Keynesian AEcurve. Using an equation and words, describe the relationship between MPCand the Keynesian spending m..
The US government has been involved in the Persian Gulf regions, in Iraq and in Afghanistan, in order not to let the terrorist groups take over and control the oil supplies and the shipments of oil to the rest of the world.
Suppose you have $200 with which you can buy shares of stock from two companies: ABC Hot Chocolate Company and XYZ Lemonade. Each company's stock currently sells for $100 per share. If the temperature next year is lower than average, the stock price ..
The main purpose of studying a market is to be able to predict qualitatively and quantitatively changes in prices resulting from changes in demand and supply conditions. For each of the following events, assume that either the supply curve or the dem..
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