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In less than 800 words, explain how Thomas Piketty relates the return on capital (r) to the rate of economic growth (g) in the context of inequality.
For each of the scenarios below comment on whether the setting can be termed as a capitalist system. If yes why, If not why not? If you think that It does not represent capitalism say how it can be modified to make It Into capitalism:
a) In the Arumbaya tribe hunters leave in the morning to find food. At the end of the day, they return with their catch and leave it all in a pile outside the village. Tribe members can come and take what they need.
b) An influencer on social media hires people to develop content for her YouTube channel. Now she provides social media solutions to various businesses.
c) The Maghrebi were an important Jewish trading community in the Mediterranean. They used to trade through overseas agents who could be trusted as they all belonged to the same community. A cheater would never be employed as an agent again.
Suppose a soap-manufacturing production process is described by the following equation:
Y = a + b log K + с log L
Where,
Y= Output (number of soaps produced) K=Capital
L=Labor
a, b and c are constants
Suppose 0<a<1, 0< b<1 and 0<c<1
- Find the Marginal Product of Labor (MPL) and Marginal Product of Capital (MPK) in the production of soap
- Is MPL diminishing, increasing or constant as L increases?
- Is MPK diminishing, increasing or constant as K increases?
Suppose Pilu and Nilu have a cake, which they need to divide among themselves. The rules are as follows:
- Pilu will propose a split, for example, she can offer a 12/88 split which means she gets 12% and Nilu gets 88% of the cake.
- Nilu decides if the split is acceptable or not. If she agrees the cake is split otherwise it Is thrown away and nobody gets anything
- a) Find the Nash equilibrium of the game.
- b) What would happen if Nilu did not have the choice to reject and had to accept the offer of Pilu?
- c) Would the outcome be any different if the game were to be repeated 5 times? Explain
A famous university in South Delhi is composed of a large poor class and a minority wealthy class of students. Each student in this university buys only two goods: new economic books and used economics books.
For each poor consumer, the income effect of a change in the price of used books reinforces the substitution effect – both are in the same direction. For each wealthy consumer, the income effect opposes and outweighs the substitution effects.
a) Think about what could cause the income effects of the two classes to be different. Explain
b) Illustrate graphically the effect of a decrease in the price of used books on an individual’s consumption in each class (poorer and wealthier students). Label the substitution and income effects for used books.
3. Ketchup is a complement for hot dogs. If the price of hot dogs rises, what happens to the market for ketchup? For tomatoes? For tomato juice? For orange juice? [Hint: four market diagrams are to be drawn]
A) identify the efficient level of production for both food and clothing. Give rationale why it is efficient level
B) discuss the possible trade offoffand opportunity cost that may be faced by this economy
C) suppose there is a drought in the economy. Graphically illustrate and explain the impact of drought in production
5. Venkatesh is a student at JGU. He has a monthly budget of Rs. 2500 to spend on either samosas, which cost Rs. 50 each, or aloo-tikki burgers, which cost Rs. 30 each.
(a): Indicate which combinations would leave some budget unspent. a) those to the left of the line in the above graph b) those to the right of the line in the above graph
(b): What is the equation for Venkatesh’s budget constraint? In your equation, use q1 as the variable to represent the quantity of samosas and q2 to represent the quantity of aloo-tikki burgers.
(c): What is the opportunity cost of a samosa?
(d). What is the opportunity cost of an aloo-tikki burger?
(e): How can one see the opportunity cost of samosa on the graph? Show it in your diagram.
5. Venkatesh is a student at JGU. He has a monthly budget of Rs. 2500 to spend on either samosas, which cost Rs. 50 each, or aloo-tikki burgers, which cost Rs. 30 each.
5a. What is the largest number of samosas that Venkatesh could afford to purchase in one month?
5b. What is the largest number of aloo-tikki burgers Venkatesh could afford to purchase in one month?
5c. Draw Venkatesh’s budget constraint. Put samosas on the x-axis and aloo-tikki burgers on the y-axis.
5d. Which combinations of samosas and aloo-tikki burgers are unaffordable? (choose 1 answer) a) Those to the left of the line in 5c. b) Those to the right of the line in 5c.
diagram.
Suppose a soap-manufacturing production process is described by the following
equation:
Y = a + b log K + с log L
Where,
Y= Output (number of soaps produced)
K=Capital
L=Labor
a, b and c are constants
Suppose 0<a<1, 0< b<1
a. Find the Marginal Product of Labor (MPL) and Marginal Product of Capital (MPK)
in the production of soap
b. Is MPL diminishing, increasing or constant as L increases?
c. Is MPK diminishing, increasing or constant as K increases?
