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Hillary spends all her income on milk and cookies. Graph Hillary's budget line when income = $20, Pcookies= $1 & Pmilk= $2. Pick some point in the middle as her optimal choice and draw in the appropriate indifference curve. (PUT MILK on the Y-axis) a. The government decides to subsidize Hillary's consumption of cookies by giving her a subsidy of $.50 for every cookie she buys (that is, she now pays 50 cents for each cookie). Graph the change including her new optimal choices of cookies and milk and show the substitution and income effects for MILK. b. Redraw the two budget lines, but without substitution and income effects. c. Given her decision, how much does the government spend? Show this graphically also. d. The government decides to change its policy. Instead of spending the dollar amount you reported in (c)as a subsidy, it will give her that amount as cash to spend as she chooses. (That is, it is not tied to her purchase of cookies. This is called a "cash equivalent.") Draw her new budget line. Is she better or worse off with the cash equivalent?
Government action is based on majority rule, whereas market action is based on mutual consent. The market allows for proportional representation of minorities, but minorities must yield to the views of the majority when activities are undertaken thro..
What is the marginal rate of substitution (MRS) and why does it diminish as the consumer substitute's one product for another. Use examples to illustrate.
Find the effective annual interest rate (b) Use your result in (a) to find the value of the investment immediately after the 10th investment (use the algebraic form of any interest factors used).
What is the probability that it will take a worker between 6 and 10 minutes to complete the task
Suppose that there are 150 houses in the community with 2,000 square feet (providing services that rent for $10,000 per year). The interest rate is 4% and with proper maintenance all of the houses will last forever. What property tax rate will be nec..
Please explain what is meant by the term informational asymmetries. What problems can these asymmetries create for participants in the money and capital markets and the financial system?
Examine the case for strong regulation in the freight market.
A restaurant/bar is analyzing its pricing of beer. It has determined that the price elasticity of demand for beer is ?0.8; the cross-price elasticity for wine with respect to the price of beer is 0.9; the cross-price elasticity for appetizers is -1.4..
An accommodating policy response to a supply shock
What is the importance of an efficient forecasting demand for a product and its relationship with economic gain?
The Bureau of Economic Analysis and access the BEA interactively by selecting "National Accounts" and then "National Income and Product Account Tables." Select "Frequently Requested NIPA Tables," and find Table 1.1.1 on GDP.
q1. would you advocate monetary restraint or stimulus for todays economy? who would disagree with you?q2. why is the
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