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Consider the model of demand deposits described in class. Suppose N=900,y=10,v^k-?=0.9,and X=1.2. Let each person have a two-thirds chance of being a type 1 and a one-third chance of being a type 2.v^k is price of capital when sold before capital produces the return of consumption good, and what is the verification costs of capital. X is the two-period rate of return on capital.
a. What bank portfolio can guarantee the rate of return 1 to all type 1 people and the rate of return 1.2 to all type 2 people? How many goods are placed in storage? In capital?
b. Now suppose the type 2 people pretend to be type 1 people and withdraw early. How many people can be paid before the bank runs out of assets?
c. Suppose that in the period after you made your deposit at the bank, you turn out to be a type 2 person and you learn that all of the other type 2 people are about to pretend to be type 1 pe ople so that they can withdraw early. Is it in your self-interest to also try to withdraw early?
d. Are type 2 people better off than they would be if no type 2 person tried to withdraw early?
If John were to lower his price by $1, he would sell more carwashes, and still be able to charge a price above his marginal cost. Explain intuitively why it would not be profit-maximizing to do so. What price should John set for a carwash.
estimate the following cross-sectional model based on data for all 50 states (standard errors in parentheses): Ci^ = 100 - 9.0E+ 1.0i - 0.04T - 3.0V + 1.5R (3.0) (1.0) (0.04) (1.0) (0.5) t = -3.0 1.0 -1.0 -3.0 3.0 where Ci = number of cigarettes c..
Suppose a prot-maximizing monopolist is producing 800 units of output and is charging a price of $40 per unit.a. If the elasticity of demand for the product is $ 2, nd the marginal cost of the last unit produced. b. What is the firm's percentage mark..
A cupola for a foundry was purchased for $3000.$500 more was spent on its erection and commisioning.The estimated residual value after 10 yeras was $700. A)calculate annual rate of depriciation. B)Determine the amount of depriciation at the end of ..
Suppose that currency in circulation is $600 billion, the amount of checkable deposits is $900 billion, excess reserves are $15 billion, and the required reserve ratio on checkable deposits is 10%. Calculate the money supply, the currency deposit r..
Suppose that disposable income, consumption, and saving in some country are $200 billion, $150 billion, and $50 billion, respectively. Next, assume that disposable income increases by $20 billion, consumption rises by $18 billion, and saving goes ..
Solve the forecast model
HEALTHCARE MANAGED CARE COMPANY IS EVALUATING TWO DIFFERENT COMPUTER SYSTEMS FOR HANDLING PROVIDER CLAIMS. There are no incremental revenues attached to the projects, so the decision will be made on the basis of the present value of costs.
In 1984, Walt Disney brought in Michael Eisner, a Paramount executive as CEO. The firm's board of directors agreed to pay Eisner a salary of $750,000 plus a $750,000 bonus for signing on, plus an annual bonus equal to 2 percent of the dollar amoun..
Explain the effect on supply and demand that the credit market crisis in the United States in 2008 had in the market for existing single-family homes. Assuming the demand for existing single-family homes is relatively inelastic.
Calculate the total price paid by consumers and the total price received and kept by producers after a tax of .30 per gallon is levied on consumers. What is the tax burden on producers and on consumers
The widget Industry in Anytown is a monopoly, controlled by Widget Corp. Its demand curve for the local market is given by P = 800 - 20 W Where W represents the number of widgets sold per period. The total cost function (including opportunity or impl..
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