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The following network N has source S and sink T with arc capacities as shown.
(a) Use the maximum flow algorithm to find a maximum flow from S to T and draw a diagram to indicate the flow along each arc.
The value of your maximum flow is: ___________
(b) Find a minimum cut.
A minimum cut is: ___________ (Key-in the edges in alphabetical order, Eg. {AB, DC, FE}) with capacity _________.
(c) If the capacity of arc EF increases by 3 unit (while leaving all other capacities unchanged), what will be the value of a maximum flow from S to T.
(d) If the capacity of arc EF decreases by 3 unit (while leaving all other capacities unchanged), what will be the value of a maximum flow from S to T.
(e) If the capacity of arc FG increases by 3 unit (while leaving all other capacities unchanged), what will be the value of a maximum flow from S to T.
(f) If the capacity of arc FG decreases by 3 unit (while leaving all other capacities unchanged), what will be the value of a maximum flow from S to T.
Consider two consumers, A and B. A and B both want perfect consumption smoothing (c = cf) and both have no current wealth. However, the two consumers have different income streams.
Discuss what policy changes he might be likely to propose with respect the issue that you identified as one about which he might be concerned.
factor for long run trend of term of trade
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