Economics of Enterprise Answers

One way of which has been proposed for sustaining high levels of contribution in voluntary contribution games is to allow participants to pay to punish free-riders.  We believe that this is effective when

Participants who are tempted to reduce contributions anticipate future punishment and so conclude that they are better off maintaining contributions.

Giving participants the ability to punish violation of a social norm means that adherence to the social norm becomes the Nash equilibrium of the game.

All of the other three statements are partial explanations, with participants being willing to punish free riding, potential free riders realising that adherence to the social norm is now the payoff maximising strategy, and the Nash equilibrium becoming adherence to the social norm.

Participants are not altruistic and so are willing to punish free riding.

Within a voluntary contribution game, the Nash equilibrium level of contribution is zero, but in experiments, it is often possible to sustain positive levels of contribution for a long period.  How might we best explain this?

Participants are altruistic, and so value the payoff which other participants receive, benefiting (indirectly) from making a contribution.

Participants believe that if they make a contribution, then other participants will be more likely to make a contribution.

Participants have experience of working in situations in which cooperation can be sustained for mutual benefit and so have internalised a social norm of cooperation.

Participants in experiments believe that they have to make contributions in order to receive any payoff from their participation.

Suppose the total product (Q) is given by the production function; [q = 4KL-0.5]

Where K= capital = 12 and L = unit of labour -36.

Calculate the average product of labour

The table below shows information about the closed economy.

Real GDP (RM million) Aggregate Expenditure (RM million) 

850 880

900 920

950 960

1000 1000

1050 1040

a) If the full employment level of income is RM1, 350 million,

i) state whether the above economy is facing an inflationary gap or deflationary gap. Give your reason.

ii) what is the effect of the gap that you named in [a(i)] to the above economy.

iii) calculate the required aggregate expenditure changes needed to eliminate the inflationary gap or deflationary gap.

b) If the full employment level of income is RM850 million,

i) state whether the above economy is facing an inflationary gap or deflationary gap. Give your reason.

ii) what is the effect of the gap that you named in [b(i)] to the above economy.

iii) calculate the required aggregate expenditure changes needed to eliminate the inflationary gap or deflationary gap.

Find equilibrium Price and Quantity and Price Elasticity of Demand from the following demand and supply functions

         i.       Q=10-2P²                      Q=5+3P

         ii.      Qd= 200-40P                Qs= -40+80P

you can eat sushi is $21++ per person during lunch period. On the entrance door there is a sign warning of no wastages of food as wastages would be charged. You have done your research as most adult would eat about 6 to 7 plates of sushi of about 2 pieces of sushi per plate during lunch. The menu price per plate is $5 per plate if ordered separately from the buffet. The lunch period is 90 min per table. The wastage to be charged would be equivalent to the $5 per plate. You decide to improve the customers’ traffic into the restaurant and increase profits by having a promotion. You propose that the buffet price would not be changed but offer each patron a piping big bowl of ramen noodles for free as soon as the patrons are seated. The promotion attempts at analyzing that patrons would most likely not wait for the noodles to get cold to eat them. In your opinion, identify and explain the economic sense that is being applied here for the sushi buffet restaurant? 

Critically assess the efficiency of the government in the south African economy 

 Studies indicate that the price elasticity of demand for cigarettes is 0.2. If a pack of cigarettes currently costs $5.00. and the government wants to reduce smoking by 40% by how much more should the government tax cigarettes?

California has been greatly affected by the forest fires of 2020. The most likely economic impact is:

an inward shift of its production possibility curve

a movement from inside its production possibility curve to the boundary

a decrease in prices of most goods because scarcity has increased

an outward shift of its production possibility curve

Need help in solving this question

• Allocate resource between two time periods t=1,2
• The fixed supply of the resource is 10 barrels 
• Demand is same in both periods and given by P_t = 15 - q_t
• Marginal cost of extracting the resource is the same in both periods and is given by MC_t=$3
• The discount rate is 7%

1. What is the dynamically efficient allocation of this resource in period 1? Please enter this number rounded to the hundredths place in the 1st box below