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Economics
Suppose you borrow 30,000 to buy a new car at an annually compounded interest rate of 18% per year compounded monthly. The loan is to be paid back monthly for 3 years (36 payments total). How much will the monthly payment be?
Economics
Suppose another bank offers you this deal? You can to invest 10,000 into their 3-year CD. But they are offering a yearly interest rate of 6%, compounded continuously. How much would the investment mature to in 3 years?
Economics
Suppose you decide to invest $10,000 in a 3-year CD. How much will this investment mature to
if the yearly interest rate is 6%, compounded monthly?
if the yearly interest rate is 6%, compounded monthly?
Economics
You borrow $1500 at 10% annual interest rate, compounded quarterly, and plan to pay back the
loan and interest together at the end of the fifth year. The sum to be paid can be determined from
a.F= 1500(F/P,10%, 5)
b.F= 1500(F/P, 2.5%, 5)
c.F= 300(F/P, 10%, 5)
d.F= 1500(F/P, 2.5%, 20)
loan and interest together at the end of the fifth year. The sum to be paid can be determined from
a.F= 1500(F/P,10%, 5)
b.F= 1500(F/P, 2.5%, 5)
c.F= 300(F/P, 10%, 5)
d.F= 1500(F/P, 2.5%, 20)
Consider the following game. The game has two players, and each player is asked a question. The players can answer a question honestly or they can lie. If both answer honestly, each receives a payoff of $100. If one player answers honestly and the other player lies, the liar gains at the expense of the honest player. In that event, the liar receives a payoff of $500 and the honest player gets nothing. If both lie, then each receives a payoff of $50.
(a) Construct the payoff matrix.
(b) What is the non-cooperative (Nash) equilibrium for this game? Explain how you have arrived at this answer.
(c) What is the optimum outcome? Is it likely to be reached? Explain.
(d) What is a “tit-for-tat” strategy? Why is it a rational strategy for the infinitely repeated prisoners’ dilemma?
(a) Construct the payoff matrix.
(b) What is the non-cooperative (Nash) equilibrium for this game? Explain how you have arrived at this answer.
(c) What is the optimum outcome? Is it likely to be reached? Explain.
(d) What is a “tit-for-tat” strategy? Why is it a rational strategy for the infinitely repeated prisoners’ dilemma?
Suppose the production function for cars is Q=LK where Q is the quantity of cars produced per year, L is the quantity of labour (person-hours), and K is the quantity of capital (machine-hours).
(a) Sketch the isoquant corresponding to the quantity of Q=24.
(b) Does the isoquant exhibit diminishing marginal rate of technical substitution (MRTS). Explain.
(c) Could isoquants relating to two different levels of output ever cross. Explain.
(d) Why must isoquant be downward sloping when both labour and capital have positive marginal products?
(a) Sketch the isoquant corresponding to the quantity of Q=24.
(b) Does the isoquant exhibit diminishing marginal rate of technical substitution (MRTS). Explain.
(c) Could isoquants relating to two different levels of output ever cross. Explain.
(d) Why must isoquant be downward sloping when both labour and capital have positive marginal products?
Lori works in a flower shop, where she produces 10 floral arrangements per hour. She is paid $ 10 an hour for the first eight hours she works and $ 15 an hour for each additional hour she works. What is the firm’s cost function? What are its AC, AVC, and MC functions? Draw the AC, AVC, and MC curves.
3. Pollution is considered by most a negative externality. Some economists would like to see the costs of these burdens incorporated into the price of goods that we buy. For instance, since coal-fired power plants increase emissions that could potentially lead to climate change, these economists believe that the price we pay for electricity is not high enough.
a.) Draw a completely labeled graph and illustrate on the graph how much higher electricity prices would be if the full costs of electricity production were taken into account. You do not need to provide actual numbers; rather, show on the price axis where the price would be before the externality is considered and where the price would be after the externality is considered.
b.) What problems might exist in determining this new, externality-based price?
a.) Draw a completely labeled graph and illustrate on the graph how much higher electricity prices would be if the full costs of electricity production were taken into account. You do not need to provide actual numbers; rather, show on the price axis where the price would be before the externality is considered and where the price would be after the externality is considered.
b.) What problems might exist in determining this new, externality-based price?
A) Suppose the monthly income of an individual increase from Rs. 20000 to 25000 which increase his demand for clothes from 40 units to 60 units. Calculate the income elasticity of demand.
B) Quantity demanded for tea has increased from 300 to 400 units with an increase in the price of the coffee powder from Rs 25 to Rs35. Calculate the cross elasticity of demand between tea and coffee.
B) Quantity demanded for tea has increased from 300 to 400 units with an increase in the price of the coffee powder from Rs 25 to Rs35. Calculate the cross elasticity of demand between tea and coffee.
Q2.
A) Determine the market equilibrium price if the demand and supply function is given as
D-12p+8
S-14p-4
Where D-demand
S-supply
P-price
B) Determine the equilibrium quantity if price is the same as above
D-4p-4q
S-8q-4p
Where D-demand
S-supply
P-price
Q-quantity
A) Determine the market equilibrium price if the demand and supply function is given as
D-12p+8
S-14p-4
Where D-demand
S-supply
P-price
B) Determine the equilibrium quantity if price is the same as above
D-4p-4q
S-8q-4p
Where D-demand
S-supply
P-price
Q-quantity
