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Analyze a two-period model for the market of computers in which two firms operate. Firm 1 only produces in period 1 and is endowed with an old technology providing a quality level vO to consumers. Firm 2 is a potential entrant in period 2 and it is able to produce an old technology, vO, and a new technology, vN . However, the production of new technology requires an innovation cost of I > 0. Note that old and new technology can be nondurable (only last one period) or durable (it lasts for two periods). Hence, the cost of producing nondurable technology, cND = 0, is considerably lower than the cost of durable technology, CD = 3. There is only one consumer in period 1 who seeks to buy a computer for the two periods of her life. In period 2, one additional consumer enters the market and seeks to buy a computer. Both consumers have the same gain from the quality of the technology embedded into the product they buy in period t. That is, V N = 7 and V O = 5 for new and old technology, respectively. The structure of the two-period, two-firm game is as follows: In period 1 firm 1 sells the old technology product and therefore has to decide which price to charge (p1) and whether to produce a durable (D) or a nondurable (ND) product. In the second period, firm 2 obviously chooses to produce a nondurable good (since the world ends at the end of period 2) and hence has to decide whether to invest in adopting the newer technology and price (p2).
Explicate which among the policies is most effective and least effective for this nation.
Determine one possible combination of government spending increases and tax increases that would accomplish the same goal.
Over the past five years American consumers have decreased their frequency of taking vacations. It is believed that a few factors may have led to this decrease. The recession of 2009 effectively stalled income growth in the country while at the same ..
Other channels of monetary policy. Consider this quote:” Monetary policy does not work simply through lowering interest rates. Sometimes it can directly affect particular credit markets in the economy.” Can you give an example of actions that the Fed..
A key difference between accountants and economists is their different treatment of the cost of capital. Does this cause an accountant’s estimate of total costs to be higher or lower than an economists estimate? Explain.
llustrate what are the quantities produced before and after the tax was imposed.
How does the price elasticity of demand for corn oil influence the quantity-demanded of corn oil and the Total Revenue earned by sellers of corn oil? Explain, using economic terms, why this is so.
Suppose the own price elasticity of demand for good X is -3, its income elasticity is -2, its advertising elasticity is 3, and the cross-price elasticity of demand between it and good Y is -5. Determine how much the consumption of this good will chan..
Suppose that your great-great-grandmother put $50 in a savings account 100 years ago and the account is now worth $1,600. Use the rule of 70 to determine about what interest rate she earned. show work, please.
What is the structure of the Fed? What is the difference between the Fed and the Treasury? What are the goals of the Fed? What actions are at the disposal of the Fed?
When the price of corn was "low," consumers in the United States spent a total of $8 billion annually on its consumption. When the price halved, consumer expenditures actually DECREASED to $6 billion annually. This indicates that:
Should the company buy or lease the fleet of trucks that it uses to transport it's products to market?
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