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The only road connecting two populated islands is currently a freeway. During rush hour, there is congestion because of the heavy traffic. The marginal external cost from congestion rises as the amount of traffic on the road increases. At the current equilibrium, the marginal external cost from congestion is $5 per vehicle. Would a toll charge of $5 per vehicle lead to an economically efficient amount of traffic? If not, would you expect the economically efficient toll to be larger than, or less than $5?
Determine the Theory of Exchange and Price Theory Theory of Exchange is commonly called Price Theory. Price determination under various types of market conditions comes under
Indifference Curve Analysis In the 1930s a group of economists, including Sir John Hicks and sir Roy Allen, came to believe that cardinal measurement of utility was not necess
PER CAPITA INCOME AND INTERNATIONAL COMPARISONS Per capita income figures can also be used to compare the standards of living of different countries. Thus if the per capita in
FUNCTIONS OF CENTRAL BANK Economists and financial experts lack in unanimity about the functions of a central bank. According to Kisch and Elkin, the essential function of a c
Question : i) Consider a discriminating monopolist is selling a product in two separate markets in which demand functions are: P 1 = 6 - Q 1 P 2 = 18 - 2Q 2 The mono
Q. Explain about Concave Isoquant? If the isoquant is concave to origin it would mean that marginal rate of technical substitution is increasing. This behaviour is explained in
a. Explain why the demand for a particular brand is more elastic than the demand for all cigarettes. If Lucky Strike raised its price by 1% in 1918, was the price elast
TYPES OF BUDGETS 1. Deficit budget If the proposed expenditure is greater than the planned revenue from taxation and miscellaneous receipts, this is a budget defic
Borrowing Facilities If a country's currency is not convertible, it can borrow from countries whose currencies are convertible and use the convertible currencies to make its i
Hayek explaination Under a fractional reserves system, it is possible for the banking system to supply resources to entrepreneurs for investment in excess of resources that are
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