Economics Answers

The economy is in a recession and the recessionary gap is large.
  
Describe the discretionary and automatic fiscal policy actions that might occur.
Discretionary fiscal policy that might occur is​ ______.
Automatic fiscal policy that might occur is​ ______.  
A.
a decrease in transfer payments and an increase in taxes with no interference by​ Parliament;
a decrease in government expenditure and an increase in taxes by a decision of Parliament
B.
an increase in transfer payments and a fall in taxes with no interference by​ Parliament;
an increase in government expenditure and a cut in taxes by a decision of Parliament
C.
an increase in government expenditure and a cut in taxes by a decision of​ Parliament;
an increase in transfer payments and a fall in taxes
D.
a decrease in government expenditure and an increase in taxes by a decision of​ Parliament;
a decrease in transfer payments and an increase in taxes with no interference by Parliament

The economy is in a recession and the recessionary gap is large.
  
Describe the discretionary and automatic fiscal policy actions that might occur.
Discretionary fiscal policy that might occur is​ ___

Allowing firms to charge a price above the marginal cost is important to promote innovations in the economy. Explain.

What motivation does a monopolist have to over-invest in plants and equipment? what factors might restrain the monopolist from such over-investing?

If the regulatory process is working effectively, the aggregate of all projects undertaken by a nondiversified electric utility firm should have a net present value that equals zero. Why is this true

8. The Public Service Company of the Southwest is regulated by an elected state
utility commission. The firm has total assets of $500,000. The demand function
for its services has been estimated as
P = $250 − $0.15Q
The firm faces the following total cost function:
TC = $25,000 + $10Q
(The total cost function does not include the firm’s cost of capital.)
a. In an unregulated environment, what price would this firm charge, what
output would be produced, what would total profits be, and what rate of
return would the firm earn on its asset base?
b. The firm has proposed charging a price of $100 for each unit of output. If
this price is charged, what will be the total profits and the rate of return
earned on the firm’s asset base?
c. The commission has ordered the firm to charge a price that will provide the
firm with no more than a 10 percent return on its assets. What price should
the firm charge, what output will be produced, and what dollar level of
profits will be earned?

if there is an increase in the price of red meat, a substitute in production of milk, then

Given demand function: Q = 20 + m/20p
m=480 p=10, calculate the demand for the product given p=10
B) calculate demand for product when o falls to 4
C) calculate substitution effect when p falls to 4
D) calculate the income effect where price is held at 4

Given the demand function :
P = 500 - 4Q^2
Calculate arc elasticity averaged along the arc joining Q = 8 and Q = 10

Lonewolf Ltd is the sole manufacturer and supplier of solar panels in the country. As a result of this the CEO claimed in a recent meeting that he can set any price he wishes and sell as many units of his products as he wants at that price. Is this correct? Motivate your answer.(7) marks