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Economics 713: Assignment 5-
Q1. The prices of consumer goods in Los Angeles and Miami are different: some things are cheaper in Miami, while others are cheaper in Los Angeles. Suppose the price of every consumer good in Houston is exactly halfway between the Miami price of that good and the Los Angeles price. A market research firm surveys 1000 consumers, who have different preferences over consumption bundles, and different incomes. The consumers are asked to rank these three cities in terms of the consumption bundles that they could afford in each place. The result of the survey is that 450 consumers rank Los Angeles first, 350 rank Houston first and 200 rank Miami first. Is this consistent with the standard theory of consumer behavior? Prove any claims that you make.
Q2. A firm has a large accumulated inventory of a storable good. There are no competing sellers of this good, and there is a linear relationship between the quantity sold in each period and the price that the firm sets. Inventory holding costs are negligible, but the cost of production is higher than any buyer would ever pay. The firm can borrow and lend freely at a fixed discount rate, and acts to maximize the present discounted value of profits. How will the firm set prices?
Q3. Show from first principles that the Condorcet Paradox is inconsistent with single-peaked preferences.
What is the marginal revenue Maria receives from selling the profit-maximizing quantity of ciabatta bread? What is the marginal cost of producing the profit-maximizing quantity of ciabatta bread?
Explain your answer in a few sentences. What state of business cycles (such as recession, trough, recovery or boom) does the current US economy face, and why - Why is it appropriate to use the CPI instead of the Gross Domestic Product Deflator in ..
if there are any additional issues you think are relevant to the choice of closing time be sure to mention them. is
The CEO of Always Ready Round Tire has decided to open a battery division. He thinks that batteries would sell well with tires at their outlets and that Always Round's quality reputation will be transferred to the batteries.
Draw Aggregate Demand, Short Run Aggregate Supply, Long Run Aggregate Supply diagram, starting at the long run equilibrium. Show on the diagram what happens to a given economy when the government lowers income taxes for all citizens. Show on the diag..
Over their lifetimes, studded tires cause considerable road damage. The best estimate of total road damage is C = .25Q2
The interactions of producers and consumers in individual markets are part of the study of Self-interested behavior and incentives are
Estimate the costs of operating the programme described above. Estimate the benefits in terms of increased productivity.
housing supply and demand is an example of the effects supply and demand can have on price elasticity. the most recent
Calculate the price of Big Mac in Turkey in terms of US dollars for each of the given dates. Calculate the amount of under/over valuation of lira against the US dollar for each of the dates given.
Describe how the price system answers the five fundamental questions of economics, and discuss at least two of the short-comings of the capitalist price and market system.
explain arthur laffers theory of tax rates relative to tax revenue. what is the effect of a tax on the deadweight loss?
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