a.Suppose there are two goods, that the prices are given, and that there is a consumer with a certain income. Show in a diagram it is possible to split the effect of price fall on good 1 into income- and substitution effects. Assume that the good is a normal good.

b.If the good had been an inferior good, what would have been different in the graph?

c.If the good had been a Giffen good, what would have beedifferent?

(a) Why do firms practice transfer pricing?

Explain how transfer pricing is affected when:

(b) There is a competitive external market for the intermediate product. (c) There is a non-competitive external market for the intermediate product.

1. Please discuss the characteristics of the perfect competition market structure.

2. What are the main characteristics of a competitive market?

3. Explain the difference between a firm’s revenue and its profit. Which do firms maximize?

One source of growth is external growth from a merger and/or acquisition. Often merger/acquisition are justified on the basis of the expected benefits from 'synergies' created by the merger/acquisition. Economists know these as economies of scale and economies of scope. The merger with the yet to be concluded merger of Sprint, T-Mobile and Metro PCS, mergers and acquisitions and determine if the synergies come from economies of scope or economies of scale. Make sure you provide a clear explanation of the difference between economies of scope and economies of scale for the merger that is yet to be concluded for the merger of Sprint, T-Mobile and Metro PCS.

Identify the two main ways government can impact the economy through its fiscal policy and briefly describe how this is accomplished.

-The demand for low-priced goods is relatively _________, and the demand for high priced goods is relatively __________.

-The more time you have to adjust to a price change, the _________ (more/less) elastic is your response, because time allows consumers to seek out available substitutes.

-For elastic, an increase in price leads to ________ in total revenue, and decrease in price leads to _______ in total revenue.

-For inelastic, increase in price leads to _______ in total revenue, and decrease in price leads to _____ in total revenue.

-For unitary elastic, increase in price leads to _______ in total revenue, and decrease in price leads to _____ in total revenue.

-Consider the market for bicycles. If a dealer cuts price by 20 percent and sells 10 percent more bikes, then demand for bicycles is:

A. Inelastic, and total revenue will increase.

B. Elastic, and total revenue will increase.

C. Inelastic, and total revenue will decrease.

D. Elastic, and total revenue will decrease.

- If popcorn sales declined 20% when the candy price dropped 10%, the cross-price elasticity of demand for popcorn = __________, a relatively elastic response.

If popcorn sales declined 20% when the movie admission price increased 10%, the cross-price elasticity of popcorn is _____, a relatively elastic response.

- When goods are substitutes, cross-price elasticity is _______. When goods are complements, cross-price elasticity is ______.

- Your income rises by 10%. You go to the movies more and buy 20% more popcorn. Income elasticity of demand for popcorn is ______.

-When a good is a normal good, income elasticity is ________. When a good is an inferior good, income elasticity is _______.

-Income elasticity of demand = 3.29 =>popcorn is an (a) ____ good b/c the income elasticity of demand is __________.

What is an economic argument in favor of more humane border policies regarding migrants and refugees? PLEASE BUILD ON YOUR FIRST THOUGHT. ISN'T THERE A PROBLEM WITH JUST REDUCING THE PRICE OF LABOR?

1. Assume that a competitive firm has short-run costs as follows:

If the P = $55, what is the firm’s profit maximizing Q and how large is the profit? What about if P = $26?

1. “Firms should never sell its product for less than it costs to produce.” Indicate if this statement is TRUE or FALSE and briefly explain if “costs to produce” is interpreted as:

• ATC
• AVC
• MC

3. Managers sometimes feel a commitment to recovering historical costs/ costs incurred long ago and make pricing & output decisions with an eye towards recovering them. Is this a good idea? Briefly explain why/ why not.

Gerrymandering is, for example, the setting of congressional district lines in order to make it more difficult for a new candidate to beat the incumbent. Economists view gerrymandering as generally inefficient – a type of market failure. Why do you think economists view it this way? Do you agree with the economic argument you identified as applied to this case? Why?

Discussion: Is This What We Should Spend Our Money On?

No unread replies.No replies.

The Federal budget is made up of three parts for planning purposes: Mandatory spending, which is enabled by ongoing appropriations, and so does not require new spending authorization; Discretionary spending, which has to be re-authorized each year; and the Interest on the Federal debt. For our purposes, because we are not looking at the legislative process, it is one single large spending pool. Below is overall Federal spending in the USA in 2018

2018 Federal Spending.  (Links to an external site.)View the document or the Interactive Graphic.

So you can see that in 2018 Federal spending added up to $4.1 trillion, or 20% of then US GDP of $20.5 trillion. Obviously this was more than revenues, which at $3.3 trillion left a deficit of (a bit less than) 800 billion dollars, or 3.9% of GDP. We spent 24% of Federal money on Social Security + 14% on Medicare, which = 38% and growing of all US Federal expenditure on retired people. Another 15% of the entire budget in 2018 was spent on the US military. In addition we spent 9.5% on Medicaid, which is medical assistance for poor people. And we spent 15.6% on natural resources and the environment, general science, space & technology, general government, community & regional development, agriculture, administrative costs of Medicare & Social Security, energy & commerce, and housing credit programs. Another 7.9% and growing was spent on servicing the national debt. About four-fifths is spent on retired people, the poor, the military and the Federal debt.

On the Federal level, education spending is allocated to Pell grants, work-study, guarantees of student debt, and Head Start, a program for poor pre-school children. The great majority of spending on education in the US is on the state and local levels, although the Federal government plays a regulatory role.

Similarly, with respect to the environment, the Federal government plays primarily a regulatory role -- in this case, most spending in terms of mitigation is by private industry. The largest exception is the national park system; there are also state and local parks and reserves.

Do you think these are the best priorities for US Federal government spending? Do you propose some other set of priorities? If so, what? Write about three paragraphs. Please use outside academic-level sources to support your position.

link: https://www.cbo.gov/publication/55342 ( 2018 Federal Spending)

Complete the following questions after reading the book If You Can: How Millennials Can Get Rich Slowly by William J Bernstein. Number each question answer corresponding to the assignment question. Answer all questions in full complete sentences.

After completing the reading, you will need to go to the AARP Retirement Calculator. (See question #7) Calculate your retirement readiness by including all relevant information about income, retirement savings and expected retirement date. Click the button to estimate your retirement. Assume you are paying into Social Security or you plan to collect Social Security in the future. Assume your income is currently $50,000 if you have no income. Compare your results with and without the 15% savings recommended by W. Bernstein. The Questions you must answer are below.

Essay Questions:

1. What investment strategy does Bernstein recommend for millennials? How does Bernstein recommend that millennials implement this strategy? What does he suggest young people do before starting a retirement account?

2. What types of funds does Bernstein recommend? Why does Bernstein recommend index funds over individual stocks and bonds? (If you don’t know what an index fund is look it up.)

3. Name the five books Bernstein recommends that young people read to learn more about the financial market. Which book are you most likely to read and why?

4. Why does Bernstein say it is difficult for young people to save?

5. What is the easiest way to start saving? What does Bernstein mean when he says “always max out the employer match”?  

6. What does Bernstein mean by expected real return? Explain the difference between real and nominal return. What return does he suggest you use considering the impact of inflation?

7. Why does Bernstein say “beware of monsters”? Who are the monsters and why is it important to stay clear of them?

8. Go to the AARP Retirement Calculator website. See www.aarp.org/work/retirement-planning/retirement_calculator.html Scroll down the page. Fill in the information assuming income of $50,000 per year if you do not have any income. Calculate your future retirement based on saving zero and saving the recommended amount recommended by Bernstein. What will you receive your first year of retirement under both scenarios? Include your expected Social Security payments if you will be eligible to collect.

9. Discuss the results. How well will you be prepared for your retirement based on saving and not saving?

10. Locate three Retirement funds that you might invest in at a financial investment firm and list the names, current price of the fund, minimum investment for an IRA or Roth IRA. Hint: IRA funds usually have a minimum investment of less than $5000. Be sure you are looking at retirement funds. (Hint: Financial Investment Firms: Vanguard Financial, Fidelity Investments, TD Ameritrade, Merrill Lynch, Morgan Stanley, Charles Schwarb, your local bank or Google a retirement investment firm. Why did you select these funds? Do you like risk or are you risk-averse? Explain.

11. Share this information with a peer, a parent, grandparent, a spouse or friend. What did they say about it?  

I’m in the market for a used car. Should I choose a conventional gasoline-powered car, a hybrid vehicle, or the 100% electric Tesla? There are three main criteria: cost, reliability, and sustainability. On a 10-point scale, the weight of reliability is 2 for me and sustainability two times more than reliability.I know the Tesla will cost the most upfront, at $50,000. Next will be the hybrid, at $20,000. The conventional gasoline car costs least, at $10,000. (Scores: 2, 5, and 10, respectively). The gasoline car is proven technology and hybrids are close behind, and then the Tesla. (Score it 10, 8, and 6, respectively).The Tesla is believed to have the least environmental impact, and scores the highest on the sustainability criterium. Next is the hybrid, followed by the conventional gasoline vehicle. (Score them 3, 2, and 1, respectively).Applying a multiple attribute evaluation, which car should I choose?

1. Suppose there is a nation which produces and consumes just calculators and notebooks in the following amounts:

1. Using the CPI, compute the percentage change in the overall price level. Use 2018 as the base year and fix the basket at 2 calculators and 6 notebooks.
2. Using the GDP deflator, compute the percentage change in the overall price level. Also use 2018 as the base year.
3. Is the inflation rate in 2019 the same using the two methods? Explain why or why not.