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Andrew, Beth and Cathy live in Lindhville. Andrew’s demand for bike paths, a public good, is given by Q=12-P. Beth’s demand is Q=18-P and Cathy’s is Q=8-(P/3) The marginal cost of building (a kilo-meter of path) is MC=$21.
(a) Find the socially desirable (Pareto Efficient) amount of bike paths (in kilo-meters).
(b) What is the total cost of building the amount bike paths you found in (a).
(c) How would government charge the individuals to cover its costs (i.e., how much each individual be charged for a unit bike path and how much each of them will end up paying in total.
Is Privatization good or bad for employment?
If Veronica Vaughn spends all of her daily income on cigarettes and Yoo Hoo, she can afford 10 packs of cigarettes and 10 bottles of Yoo Hoo. She can also afford 6 packs of cigarettes and 22 bottles of Yoo Hoo.
(a) What is the relative price of cigarettes in terms of bottles of Yoo-Hoo (i.e, what is the ratio of prices, Pc/Py?)
(b) Exactly how much income does Veronica earn in one week if the price of cigarettes is $6? Write a budget equation for Veronica that is a function of the pack of cigarettes, C, and the number of bottles of Yoo Hoo, Y.
(c) Draw veronica’s daily budget set with packs of cigarettes on the x-axis and bottles of Yoo Hoo on the y-axis.
) Discuss the differences that exist between quotas and Volunteer Export Restraints (10 Marks)
c) Sate and explain the different types of dumping (9 Marks)
Consider a firm's profit function, II(x) = R(2) -C(2), where R(x) is total revenue as a function of output (2), and C(x) is total cost as a function of output
(a) Under perfect competition, each firm is a price taker. Assuming a competitive market price, p* = 10 and a cost function, C(x) = (x – 5), express the firm's profit as a function of x.
(b) Find the competitive firm's profit maximizing level of output, r* (Hint: maximize the firm's profit by taking the first derivative of the profit function, setting it equal to zero, and solving for the level of output, r*).
(c) If the firm were only interested in minimizing costs, what level of output would it choose?
How does the government promote secondary industries?
Discuss the benefits and drawbacks of commercial papers as an investment vehicle
The elasticity coefficient calculated at a point on a demand curve is known as what?
Draw and explain an aggregate demand and supply diagram to illustrate the fact that the economy is experiencing a capacity constraint.
Initially, real interest rates in the United States, England, and Japan are all equal, at 5 percent. Then the central banks alter their policies, so that the American interest rate rises to 6 percent, the Japanese rate falls to 4 percent, and the British rate stays at 5 percent.
a) How would you predict that capital flows among the three countries would change?
b) Using supply and demand curves, show how the exchange rates are likely to change.
c) How do you expect the balance of trade in the three countries to change?
