Economics Answers

In which case a contract between two agents may have pareto improvements?

Assume you are hired by a union, and asked to find ways to increase the bargaining power of the union. Write a suggestion you can make to the union to increase their bargaining power. Explain why you think your suggestion will work.

What factors ensure that the magnitude of economic rents earned by firms in a perfectly competitive markets are different from the magnitude earned by firms in a differentiated goods market?

Vegetable prices in Pakistan are skyrocketing. Tomato prices in local markets
have shot up to Rs. 220-250 per kg while prices of other vegetables have also
increased considerably. According to official rates, the price of tomatoes was
Rs180 per kg but its price has touched Rs. 300 in retail markets which led to a
lower quantity demanded of this vegetable. The given table describes what
happened to prices and the quantities of tomatoes demanded.
Price
(Rupees)
Quantity Demanded
(Kilograms)
200 800
300 750
Requirements:
A. Calculate price elasticity of demand for tomatoes when price is between
Rs. 200 and Rs. 300 by using arc elasticity method.
B. After calculation, interpret your result whether demand for tomatoes is
elastic or inelastic.

Beckheart is seeking fi nancing for its inventory. Safe-Proof
Warehouses off ers space in their facility for Beckheart’s inventory.
They off er loans with a 15 percent APR equal to 60 percent of the
inventory. Monthly fees for the usage of the warehouse are $500 plus
0.5 percent of the inventory’s value. If Beckheart has saleable inventory
of $2 million, answer the following:
a. How much money can the fi rm borrow?
b. What is the interest cost of the loan in dollars over a year?
c. What is the total amount of fees to be paid in a year?
d. What is the eff ective annual rate of using Safe-Proof to fi nance
Beckheart’s inventory?

Consider an economy with two commodities, x and y, and two agents A and B, Their utility
functions are

The theory of Comparative Advantage in production and trade specifies that countries should engage in the production of goods and services for which they have a comparative advantage or lower opportunity cost than others. Do you think this theory can be effectively applied even where there is a wide technological or developmental gap between two countries?

Using market supply and demand analysis why labor union leaders are strong advocates of raising the minimum wage above the equilibrium wage

Calculate the correlation coefficient between fixed acidity and volatile acidity and
between residual sugar and chlorides. Comment on the strength and direction of
association for the two variable pairs.