Economics Answers

) An open macroeconomic model for a hypothetical economy is represented as follows

Y= C0 +Io+Go+X0-M, M=mo+m1yd,C=co+c1yd, T=tY and Yd=Y-T

Show that equal change in tax and government expenditure are expansionary to the economy

Given the following estimated demand equation,

Where Qy is the quantity demanded of good Y, Py is the price of good Y, I is the income of the consumer, Px, Pw and Pz are the prices of good X, W and Z respectively. Py = 100, Pw = 300, Pz = 400, Px =100 and M = 40,000. Compute income elasticity of demand, own-price elasticity of demand and the three cross-price elasticity of demand.

Your question (max 1024 symbols)Given the following estimated demand equation,

Where Qy is the quantity demanded of good Y, Py is the price of good Y, I is the income of the consumer, Px, Pw and Pz are the prices of good X, W and Z respectively. Py = 100, Pw = 300, Pz = 400, Px =100 and M = 40,000. Compute
1. income elasticity of demand
2. own-price elasticity of demand
3. three cross-price elasticity of demand.

Suppose the consolidated balance sheet of an economy’s banking system is shown in the following table:
Assets: Liabilities:
Currency 10 Deposits 2000
Deposits at the central bank 90
Government Bonds 300
Loans Outstanding 1800 Capital 200
Total 2200 Total 2200
In answering the following questions, assume that the banking system is initially in equilibrium and that
the public holds all of its money in the form of deposits in the banking system.
Briefly explain how the commercial banks respond to this new situation. Show the eventual effect on the balance sheet when the banking system has returned to equilibrium. What is the new level of the money supply?

Under a perfect competition the price as sh. 6 per unit has been determined. An individual firm has a total cost function given by C=10+15Q - 5Q^2+Q^3/3. Find:
1. Revenue function
2. The quantity produced at which profit will be maximum profit
3. Maximum profit

Given the following monotonically transformed utility function faced by the consumer
U(X1X2) = X_1^0.5 X_2^0.5
The price of good X1 is P1 and the price of good X2 is P2.
Derive the optimal demand (Marshallian demand) function for X1 and for X2.

1. At L=4, K=4, the marginal product of labor is 2 and the marginal product of capital is 3. What is the marginal rate of technical substitution?
2.Explain why perfectly competitive firms cannot earn positive economic profits in the long run.
3. Explain why monopolies are economically inefficient.
4. Why are substantial economies of scale considered a barrier to entry?
5. Why do monopolistic competitors have a tendency to advertise much more than perfectly competitive firms.
6. Briefly explain the concept of price leadership and why it occurs in oligopolistic markets

Respond to the following question:

Suppose a country has a national debt of $5,000 billion, a GDP of $10,000 billion, and a budget deficit of $100 billion.

How much will its new national debt be?
Compute its debt-GDP ratio.
Suppose its GDP grows by 1% in the next year and the budget deficit is again $100 billion. Compute its new level of national debt and its new debt-GDP ratio.
Explain your answers for all of these questions (one well composed paragraph for each question).

using the concepts of economies and diseconomies of scale, explain the shape of a firm's long-run ATC curve.

using suitable graphs, explain the effects of taxes and subsidies on equilibrium price and equilibrium quantity