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Assuming that the UAE economy is in recession. What are the implications of this indicator? Why might this indicator be inaccurate
Consider a firm operating in a competitive output market. The firm produces output (Y) with input factors labour (L) and capital (K). Let 𝑤 and 𝑟 be the real prices of both inputs, respectively, so normalising the price of output to 1. The firm has a CES production function given by: 𝑌 = 10(0.2𝐾 ^1/3 + 0.8𝐿 ^1/3 ) ^3.
What is the definition of the elasticity of substitution? - And what is the value of the elasticity of substitution in this example
2. A manufacturer of electronics products has developed a handheld
computer, for which the cost of production is given below. Also given are
Quantities and prices that the firm believes it will be able to sell.
Q (1000) Price MR AVC AC MC
01650
1 1570 1570 1281 2281 1281
2 1490 1410 1134 1634 987
3 1410 1250 1009 1342.33 759
4 1330 1090 906 1156 597
5 1250 930 825 1025 501
6 117 770 766 932.67 471
7 1090 610 729 871.86 507
8 1010 450 714 839 609
9 930 290 721 832.11 777
10 850 130 750 850 1011
(a) What price should the firm charge if it wants to maximize profit in the short
run?
(b) What arguments cam be made for charging a price higher than this price? If a
higher price is indeed established, what amount would you recommend?
Explain.
(c) What arguments cam be made for charging a price lower than the profit
maximizing level? If a lower is indeed established, what amount would you
recommend? Explain.
How does great depression and great MEDERATION PERIOD related to Nigeria economics
Between January and December 1991, while the U.S. economy was falling deeper into its recession, the interest rate on Treasury bills fell from 6.3 percent to 4.1 percent. Use the IS-LM model to explain this pattern of declining output and interest rates. Which curve must have shifted? Can you think of a reason—historically valid or simply imagined—that this shift might have occurred?
Why does a horizontal LM curve imply that fiscal policy has the same effects on the economy as those derived in Keynesian Model (horizontal AS)?
What are the implications of a horizontal LM curve for the link between goods market and asset market?
Under what circumstances might the LM curve be horizontal?
Two bridges A and B are to be compared on the basis of capitalized cost at 5% interest.
Bridge A has an estimated life of 25 years, initial cost of P50M, renewal cost of P35M, annual maintenance of P0.5M, repairs every five years amounting to P2M and salvage value of P5M.
Bridge B has an estimated life of 50 years, initial cost of P75M, renewal cost of P75M, annual maintenance of P0.1M, repairs every five years amounting to P1M and salvage value of P10M.
The initial cost can paid out of available funds. All other expenses will be defrayed by sinking funds. a. What is the capitalized cost of Bridge A?
b. What is the capitalized cost of Bridge B?
c. How much savings is realized by choosing the more economical of the two bridges?
Ketchup is a complement for hot dogs. If the price of hot dog rises, what happens in the market for ketchup?
Suppose that price of one of the two goods increases while price of the other good and the total budget of the consumer kept unchanged. i) What is the consequence on the budget line and the purchasing power of the consumer? Explain logically with illustration. ii) Will the consumer be better off (be on the higher indifference curve) or worse off (be on the lower indifference curve)? iii) Show the changes in welfare in terms of income effect and substitution effect
In the short run, equilibrium for monopolistically competitive firms resembles equilibrium for monopolist in that
