Suppose that firms A,B,C and D are Bertrand duopolists in the salt industry. The market demand curve can be specified as Q=100-3p, Q=qA+qB+qC+qD. The cost of firm A is C(qA)=7qA The cost of firm B is C(qB)=3qB The cost of firm C is C(qC)=7qC The cost of firm D is C(qD)=5qD

Firm A will earn?

Firm B will earn?

Firm C will earn?

Firm D will earn?

A dominant or price setting firm and several smaller price takers serve a market where total market demand is Qd = 560 – 2P and the combined supply from all the smaller firms is Qs = - 60 + 2P.

1. State the demand (Q_df=) and inverse demand (P_df=) function for the dominant firm (df).

2. If the dominant firm decides to produce 220 units, determine the price (P) it will set for the market and the (combined) quantity supplied by all the small firms (Qs).

3. Does this market meet the assumptions that the dominant firm has at least a market share of 50%? (you must motivate your answer numerically)

What is the business cycle? Explain.

What is fiscal policy?

What are the tools of fiscal policy?

Explain how fiscal policy can be used in a recession and provide an example from our recent economic history.

Social Cost

Why don't firms and markets naturally take into consideration social costs?

1. Suppose Sara is risk averse and wants to insure her​ store, which is worth ​$120,000. There is a 25% probability that her store will burn next year. If a fire​ occurs, the store will be worth only ​$60,000. The local government assesses a property tax of ​$4,000 on​ Sara's store. If the tax is collected whether or not the store​ burns, how much fair insurance does Sara​ buy? If the tax is collected only if the store does not​ burn, how much fair insurance does Sara buy?
2. What type of risk behavior does the person exhibit who is willing to pay $5 for the chance to bet $60 on a game where 20% of the time the bet returns $100, and 80% of the time returns $50? Explain.

Would like to have a nice summary for each question.

The Profit Maximizing decision for the Monopolist with the Perfectly Competitive firm/industry. How do they differ? Note the differences between the Demand curve for the PC firm and the Demand curve for the Monopoly. What kinds of profits accrue to the Monopolist? Why is it said that the Monopolist’s profits persist? Why is that not true for the firms in a Perfectly Competitive industry?

Thanks

You have learned that money velocity is rather stable. Assume for simplicity that the velocity is constant (the quantity theory of money). Explain how the growth in the money supply and inflation are related.

3. What is the shape of the AS curve in the SR versus the LR and why?

1. a) When the Fed lowers interest rates, what is the impact on the value of the dollar, exports, imports, consumption, investment, and the AD curve?

b) When the Fed raises interest rates, what is the impact on the value of the dollar, exports, imports, consumption, investment, and the AD curve?

2.Explain the differences between classical economists and Keynesians in regards to monetary policy during a recession.

3. Explain efficiency-wage theory.

1. A. Assume that the total population is 200, the size of the labor force is 100, the amount of people employed is 90, and the amount of people unemployed is 10. Calculate the unemployment rate?

B. In general, approximately what is the lowest unemployment rate that can reasonably expected and why?

In your own words, write a short business report (400-500 words) about Alibaba Group business model?

Why will the price level tend to rise as firms get closer to their productive capacity? Would expansionary fiscal and monetary policy be beneficial on the vertical portion?

4. Common resources and the tragedy of the commons

Rajiv, Yakov, and Charles are lumberjacks who live next to a forest that is open to logging; in other words, anyone is free to use the forest for logging. Assume that these men are the only three lumberjacks who log in this forest and that the forest is large enough for all three lumberjacks to log intensively at the same time.

Each year, the lumberjacks choose independently how many acres of trees to cut down; specifically, they choose whether to log intensively (that is, to clear-cut a section of the forest, which hurts the sustainability of the forest if enough people do it) or to log nonintensively (which does not hurt the sustainability of the forest). None of them has the ability to control how much the others log, and each lumberjack cares only about his own profitability and not about the state of the forest.

Assume that as long as no more than one lumberjack logs intensively, there are enough trees to regrow the forest. However, if two or more log intensively, the forest will become useless in the future. Of course, logging intensively earns a lumberjack more money and greater profit because he can sell more trees.

The forest is an example of   because the trees in the forest are   and   .

Depending on whether Yakov and Charles both choose to log either nonintensively or intensively, fill in Rajiv's profit-maximizing response in the following table, given Yakov and Charles's actions.