Economics Answers

In the uk each household that owns a television pays compulsory levy that is equivalent to $233 per year. The total revenue collected which is over $7 billion annually goes to the British Broadcasting Corporation
Do you think such a tax is likely to have a likely substantial excess burden relative to the revenue collected

Consider an island with exclusive fishing rights to their own waters. The fishing industry is
unregulated and the production function, representing the yearly catch, is given by
f (x) = 22x - x 2 /40 where is the number of boats launched. Yearly industry profit is split equally
among fishing boats and the cost of launching a boat equals 80. Fish is sold at a world market price
of p=40. A market failure is likely to occur in this market. Explain why and analyze the problem by
comparing the profit maximizing solution for the fishing industry with “sustainable” fishing
(revenue maximizing solution) and the free entry solution. Suggest a policy that leads to an efficient
outcome.

A monopolist faces two totally separated markets with inverse demand p=100 – qA and
p=160−2qB respectively. The monopolist has no fixed costs and a marginal cost given by mc= 2 /3
q Find the profit maximizing total output and how much of it that is sold on market A and market
B respectively if the monopoly uses third degree price discrimination.
a) What prices will our monopolist charge in the two separate markets? (6 m)
b) Calculate the price elasticity of demand in each market and explain the intuition behind the
relationship between the prices and elasticities in these two separate markets

A student has income of 250 available to the apartment and other services during one
year. Housing services are measured in units x. Higher values ​​of x mean a larger apartment with
better standard (think 'square meters').Consumption of "other goods" is measured
in units y.

Let the rental price per unit of residential consumption be Px= 10. Let the price of one unit
other benefits are Py= 1.

We assume that the individual has preferences that can be represented by the utility function

U(x.y) =x + √y

(g) (5 points) Find the consumer's optimal consumption of housing services (x) and consumption of other goods (y).

(h) (5 points) Let's say that it is a general inflation that makes both the consumer's
income double and at the same time prices double. Will this affect the consumer's choice?
(Explain)

Hint: Show that the budget line is unchanged.

Given that IS is Y = 2500-50i, and the interest rate reaction function is ip = 2 + 0.5(P-P*), where ip is the central bank policy rate. Assume that i (interest rate) is 0.5 + ip (interest rate is a wedge over the policy rate). Determine the AD function. If AS function was Y = 0.25(P-P*) + 2000 determine Y* and P* and inflation rate. Assume P* = 105.

Suppose the IS curve for Fiji is Y = 2500-125i and the LM is Y = 1000+25i. Use Cramer’s rule to determine i* and Y*. Now suppose the Fijian Government increased spending by $100m. Determine the extent of crowding out of private investment and the increase in Ms required to dampen any crowding-out effect. You are given the following parameters: αG = 2.5, h = 65, k = 0.5, b = 50.

Mr. Umais can earn money from various activities. His hourly earnings from cricket is Rs.5,000, acting Rs.30,000, coaching Rs.10,000 and ceremonies Rs.15,000. What is the opportunity cost of an hour of coaching for Umais?

If the Central Bank is concerned about a decline in business investment,
a)What steps might it take to stimulate the economy?
b)What will be the impact on bank reserves?
c)What will be the impact on interest rates?

if population size remain same but labor force participation rate falls then what does it imply?

when price is high demand is low true or false