Economics Answers

What are the basic questions that we seek to answer in this chapter? In what way is the model presented in this chapter an abstraction or a simplification of the real world? Can the model be generalized? 

If a production is Q=250K^0.7L^0.3 determine the marginal product of capital and marginal product of labour when k=50 and L=50

Analyze whether social benefits, social costs, etc. are affected by vaccine shortages.

Draw diagrams to illustrate. (Obligatory)

"When it comes to pandemics, inadequacies of the vaccine is an example of negative externalities in the market. Leads to market failure. The unvaccinated population poses a greater risk to society as the virus continues to spread and markets close."

Explain in detail why negative externalities lead to market failure? What exactly are negative externalities? in production or consumption?

In Figure 11-10( Dornbusch Fischer ) the economy can move to full employment by an expansion in either money or the full employment deficit . Which policy leads to E1 and which to E2 ? How would you expect the choice to be made ? Who would most strongly favor moving to E1 ? Versus E2? What policy would correspond to "balanced growth"?

Consider two alternative programs for contraction.One is the removal of an investment subsidy;the other is a rise in income tax rates. Use the IS-LM model and the investment schedule ,as shown in Figure 11-9 ( Dornbusch Fischer ) , to discuss the impact of these alternative policies on income , interest rates ,and investment.

In a Nash cournot equilibrium, does an oligopolistic firm produce at less than full capacity, full capacity or more than full capacity? Explain with graphs

Suppose the government cuts income taxes.Show in the IS-LM model the impact of the tax cut under two assumptions:a)The government keeps interest rates constant through an accomodating monetary policy.b) The money stock remains unchanged .Explain the difference in results.

1. Suppose that identical duopoly firms have constant marginal costs of $16 per unit. Firm 1 faces a demand function of q₁ = 70-2p₁ + p₂, where q1 is Firm 1's output, p1 is Firm 1's price, and p2 is Firm 2's price. Similarly, the demand Firm 2 faces is q2 = 70-2p2 + p1. Solve for the Nash-Bertrand equilibrium.

2. Solve for the Nash-Bertrand equilibrium for the firms( described in above question) if both firms have a marginal cost of $0 per unit.

3. Solve for the Nash-Bertrand equilibrium for the firms ( described in above question 1) if Firm 1's marginal cost is $25 per unit and Firm 2's marginal cost is $15 per unit.

“We can have the GDP path we want equally well with a tight fiscal policy and an easier monetary policy , or the reverse , within fairly broad limits . The real basis for choice lies in many subsidiary targets , besides real GDP and inflation, that are differently affected by fiscal and monetary policies.” What are some of the subsidiary targets referred to in the quote ? How would they be affected by alternate policy combinations?