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1. Suppose the wage rate is w = 1. An agent is working 6 hours per day and consumes 5 units of goods per day. Suppose that the agent claims to be indifferent between his current
Normal profit: Normal profit is when total revenue is exactly equal to total cost when the latter includes both explicit costs. It is the type of profit when made by firms in
Joe won $365,000 a year for life in the state lottery. Use a labor-leisure choice analysis to answer the following: a. Show how Joe’s lottery winnings affect the position of his b
what are the tools for decision making
• Production Function . The factors of production have to be combined in a particular manner to produce a certain product. Think of baking a cake which involves mixing fixed propor
1. What is a resource market? 2. Describe resource demand and resource supply. 3. Define derived demand. 4. Describe the resource market demand and supply curve. 5. Define a te
Change in consumer and producer surplus from price controls * Observations: - The loss is equal to area B + C. - The change in surplus = (A - B) + (-A - C) = -B - C -
Domestic Policy Failures: i) There is too much emphasis on "ownership" ownership of bad policies can lead to disasters. So, at times, the Fund and the Bank will need to be "p
Aggregate household indebtedness: This is the purchasing power of the sum of money outstanding that households have borrowed and are currently obligated to repay. If household
Explain the difference between a stock and a flow. A stock is something whose quantity is calculated at a point in time, whereas a flow measures the quantity of something ove
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