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If an indifference curve is convex from above (bowed out), which of the following statements would be true
1.
The more you have of a good, the less you desire additional units of the good.
2.
The less you have of a good, the more intense your desire for more of it.
3.
The more you have of a good, the more intense your desire for more of it.
4.
This type of indifference curve violates the more-is-better-than-less assumption
underlying indifference curves.
The demand for apple orchard workers is given by the equation W = 80 - 3 Q and the supply
is given by W = 30 + 2 Q where W is the daily wage rate and Q is the quantity of workers.
Calculate Elasticity of demand and supply at equilibrium price and quantity.
Morgan Stanley has a current cash flow (at time 0) of $3.4 m and pays no dividends. The present value of the company’s future cash flows is $14.6 m. The firm is entirely financed with equity and has 400,000 shares outstanding. Assume the dividend tax rate is zero.
1. Suppose the board of directors of Morgan Stanley announces its plan to payout 40% of its current cash flow as dividends to its shareholders. How can Andy, who owns 800 shares of Morgan Stanley stock, achieve a zero payout policy on his own?
Briefly discuss the necessary conditions for price discrimination. What do you
understand by the perfect price discrimination?
Show the profit maximizing condition of a monopolist. Does the monopolist always earn
super normal profit in the short run? Explain using an appropriate diagram
Explain why in the short run, the equilibrium price of the perfectly competitive firm is
equal to marginal cost and in the long run, equilibrium price is equal to marginal cost as well as
average cost of the firm.
Give an example of an opportunity cost that an accountant might not count as a cost. Why
would the accountant ignore this cost
Qd = 180 – 2P
Qs = - 15 + P
If a tax of Rs 2/unit is imposed on sellers, calculate the effect on the price paid by buyers
and price received by sellers. Demonstrate that the effect would be unchanged if the tax
had been imposed on buyers instead of sellers. (2+2.75 +3)
Suppose the government imposed a price floor on the rental price of labor higher than
equilibrium price. How does this affect the market for labor?
How does increase in the price of sugar affect the equilibrium quantity and price of coffee?
Illustrate using a graph
