Economics Answers

Consider the market for ice cream in Paris. Using appropriate diagrams, explain how each of the following events will impact the equilibrium price and quantity of ice cream.

a. The population of Paris falls.

b. The cost of milk (an input in production) increases.

c. Both the population of Paris falls and the cost of milk increases at the same time.

Explain with the help of the diagram provided, how the government can internalize the negative externalities in production.

The bank is requiring a debt-to-equity rate of 0.75. what is the maximum additional amount will be able to borrow

Are Keynes’s ideas still relevant today?”

Explain Keynes’s theory of investment and why it is central to his more general theory of output and employment. Are Keynes’s ideas still relevant today?”

Suppose that the consumer asked to contemplate a gamble with a probability of 60% of winning birr 10,000 with a utility of 10 utils and 40% probability of winning birr 15000 with a utility of 12 utils. What will be expected income

discuss each of the following statements from the standpoints of equity and efficiency.

a). everyone in society should be guaranteed the best health care possible.

b). when workers are laid off they should be able to collect unemployment benefits until they find a new job.

Should a perfect competitive firm produce if prices were less than the minimum level of

average variable cost, explain using diagram.

In each of the following scenarios, explain and categorize the cost of inflation.

a. Because inflation has risen, the J. Crew clothing company decides to issue a new catalog monthly rather than quarterly.

b. Grandpa buys an annuity for $100,000 from an insurance company, which promises to pay him $10,000 a year for the rest of his life. After buying it, he is surprised that high inflation triples the price level over the next few years.

c. Maria lives in an economy with hyperinflation. Each day after being paid, she runs to the store as quickly as possible so she can spend her money before it loses value.

d. Gita lives in an economy with an inflation rate of 10 percent. Over the past year, she earned a return of $50,000 on her milliondollar portfolio of stocks and bonds. Because her tax rate is 20 percent, she paid $10,000 to the government.

e. Your father tells you that when he was your age, he worked for only $4 an hour. He suggests that you are lucky to have a job that pays $9 an hour

A newspaper article once reported that the U.S. economy was experiencing a low rate of

inflation. It said that “low inflation has a downside: 45 million recipients of Social Security and

other benefits will see their checks go up by just 2.8 percent next year.”

a. Why would policymakers link increases in Social Security and other benefits to inflation?

b. Is the small increase in benefits a “downside” of low inflation, as the article suggests?

Why or why not?