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Suppose that thedemand curve for corn is downward-sloping but that the supply curveis perfectly price inelastic at a quantity of Q* once the corn isharvested. Furthermore, assume that the equilibrium price is $ 5per bushel.
a. If the U. S. government decides to enter the marketfor corn and purchase enough so that the price doubles to $ 10 perbushel ( assume that the corn is given away to Russia), indicate ona supply- demand diagram the amount spent on corn by privateAmerican consumers and the amount spent on corn by the U. S.government. If the demand for corn by private American consumers isprice inelastic ( suppose that demand elasticity is equal to 0.5),which amount is larger- that spent by the govern-ment or that spent by private consumers?
b. An alternative method for helping corn farmers is to have thegovernment pay them a subsidy of $ 5 per bushel of corn. Show graphically the amount spenton corn by private consumers under this proposal as well as theamount spent by the U. S. government. Again assuming that thedemand elasticity for corn is 0.5, is the cost to the government ofthe subsidy program greater or less than the cost of the programdescribed in part a?
Compute the point price elasticity of demand for bearing grease. Compute the optional price for bearing grease if marginal cost is $4.50 per unit.
Does that mean that, by using the Phillips curve, is the unemployment rate zero when the rate of inflation is neither increasing nor decreasing?
Suppose you introduced a new consumer food product and invested heavily in (1) national advertising (pull strategy) and (2) motivating your field sales force to sell the product to food stores (push strategy). What kinds of feedback would you re..
Would you have been less likely or extra likely to borrow the money if they had known the true inflation rate? Who was hurt by the fact that the actual inflation was not equal to the expected inflation rate, the lender or the borrower?
Elucidate three manufacturing companies that experienced large percentage increases in the number of firms between 1997 and 2002.
Illustrate what is the price elasticity of supply for your chosen industry.
If the price per visit is given to be $25, at what level of visits will the maximum profit position be?What are the profits at this level?
Based on the newspaper government spending in the US is expected to rise through $30 billion next year. One of the senators of your state is touting how this increase in spending will lead to an rise in employment and aggregate output.
The Pulte Group, Inc., a New York Stock Exchange-traded corporation, is preparing for a briefing of investment analysts to be held in September 2011. As a member of the investor relations staff, you have been asked to prepare an overview of U.S. e..
Suppose the marginal cost curve in the short run first decreases, then reaches a minimum, and then increases. If we are at an output where marginal cost is decreasing, then: A. marginal product must be increasing. B. average variable cost must be d..
In view of the problems involved in regulating natural monopolies, compare socially optimal (marginal cost) pricing and fair?return pricing by referring again. Assuming that a government subsidy might be used to cover any loss resulting from margi..
Consider two used-car dealers: Bob’s Better Wheels and Dewey, Cheatum, and Howe Motors. Their prices are basically the same for similar vehicles even as their advertising screams that their products are different.
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