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Transfer pricing is one of the methods that MNCs use to move money around the world. This practice is still legal, but has been creating major problem in the world. Explain the problem and discuss how you would go about solving this problem.
Assume that two firms sell differentiated products and face the following demand curves: = 15 − + 0.5 and = 15 − + 0.5 (Assume that the marginal cost is zero) Derive the best response function for each firm. Do these indicate that prices are strategi..
Discuss the two types of inflation. Explain the differences and give an example. Explain what, if anything can be done to avoid either type?
Assume an open, mixed economy (C + I + G + X = real GDP) and an MPS of .2 What is the multiplier? The result will be a $200B decline in real GDP. Was this policy of increasing government spending and taxes by the same amount expansionary, contraction..
Illustrate a firm in monopolistic competition that does not make a profit but rather a loss. Now illustrate how firm exit will change demand in the long run, allowing at least some firms to break even.
Clearly show on your graph the old equilibrium price and quantity and the new equilibrium price and quantity. Can you tell for certain whether the new equilibrium price will be higher or lower than the old equilibrium price?
Comment on the following statement: “If John McCain had won the 2008 election everything would have been different.” What would have been different? Would that be a good or bad thing? Would anything be the same? What if Mitt Romney had won the 2012 e..
What happens to the aggregate quantity demanded in nominal terms over this interval? Using the formula for price elasticity of demand what is the elasticity of aggregate demand over this interval?
the bursting of the housing bubble and the panic of 2008 caused both businesses and households to cut back on their
Your the manager for a college football team. Assume you own the stadium and the variable cost per attendant is $0. You’ve been told by your in-house economist that you should set the price of tickets at $50 to maximize profit. Your football coach is..
CASE STUDY SCENARIO Allan’ s Fast Store is the only fast food in Duke Town and the factory workers purchase lunch there every day. Mr. Allan, the owner, had lowered the price, which caused an increase in demand. The relationship between TR and price ..
Given the estimate for own price elasticity is -4.5, and the upper and lower 95% confidence intervals are -.5 and -8.5, what is the standard error for the own price elasticity estimate?
If the inverse demand function is P=175-3Q, where Q is the Quantity, P is the market price, and suppose the cost function is , i=1,2. Find: Cournot quantity, price, consumer surplus, and each firm`s profit( Hint: two firms are operating in this marke..
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