Coyote, Inc. sells in two markets, Market A and Market B.  Demand in Market A is Q_A = 80 - 2P_A and demand in Market B is Q_B = 120 - 4P_B.   For any given output Q, Coyote's cost of production C(Q) = 50 + 10Q + 0.125Q². If Coyote is able to practice 3rd degree price discrimination between these markets its maximum profit will equal ________.

(a) What is the compensating variation? What is the equivalent
variation? What is the di¤erence between them?
(b) You consume two goods, good x and good y. These goods sell
at prices px = 1 and py = 1, respectively. Your preferences are
represented by the following utility function: U(x; y) = x + ln(y):
You have an income of m = 100. How many units of x and y
will you buy and what will is your utility? If px increases from
$1 to $2; gure out the compensating variation (CV) associated
with price change.
(c) If instead your utility is U(x; y) = ln(x) + y; gure out the com-
pensating variation (CV) as px increases from $1 to $2:
(d) Are the compensating variations the same for both of the above
utility functions? Explain your answer rigorously.

Gasoline is sold through local gas stations under perfectly competitive

conditions. All gas station owners face the same long-run total cost function given by:

LRTC= 0.01q³-2q²+101q

                        Where q is the number of gallons sold per day.

1. Assuming the market is in long-run equilibrium, how much gas will each firm sell per day? What is the value of long- run average cost at this output level? What is the long run equilibrium price?

        (b) The market demand for gasoline is given by:

Q_D= 2,500,000 - 500,000P

Where Q_D is the number of gallons demanded per day and P is the price per gallon. Given your answer to part (a), how much gasoline will be demanded and how many gas stations will there be?

        (c ) Graphically Show your results.

We know that a profit maximizing competitive firm will set its price equal to the market price. Briefly describe why a profit maximizing competitive firm will not set its price above the market price. Also, describe why a profit maximizing competitive firm will not set its price below the market price.

Find WN, MRC, and MRP cells. Determine W* and N* from the information provided. Graph the labor supply and demand and MRC curve from the table's data. (Wages Y axis 10,20,30,40 ect, Labor X axis 1,2,3,4 ect.)

                        W N WN MRC MP MR MRP

                        50 1 ------ ------ 11 10    ------

                        50 2 ------ ------ 10 10 ------

                        50 3 ------ ------ 9 10 ------

                        50 4 ------ ------ 8 10 ------

                        50 5 ------ ------ 7 10 ------

                        55 6 ------ ------   6 10 ------

                        60 7 ------ ------ 5 10 ------

                        65 8 ------ ------ 4 10 ------

                        70 9 ------ ------ 3 10 ------

                        75 10 ------ ------ 2 10 ------

The federal dependent coverage mandate (FDCM) allows young adults to stay on family/parent health insurance plans until they reach age 26. At 26, they must find their own insurance coverage. Many studies show that this age limit causes individuals to be 4-10 percentage points less likely to be insured at 26. a. One study shows that individuals who lose insurance at 26 because of the FDCM do not change their smoking or drinking behavior. What would the theory of moral hazard say should happen to smoking and drinking behavior when individuals lose insurance coverage? What might explain why these individuals’ smoking and drinking behaviors do not change? b. Another study on the FDCM shows that when individuals lose insurance coverage, they are less likely to purchase addictive prescription drugs such as benzodiazepines (for example, Xanax), opioids (OxyContin), and stimulants (Adderall). What does this imply about price elasticity of demand of prescription drugs?

What was the effect of 1989 on Central and Eastern Europe?

2. Using Marx’s theory of competition do you think that the U.S. is competitive or is there a new stage of monopoly capitalism? Start by explaining Marx’s view and then review the empirical evidence.

. If someone asked you does the rate of profit tend to fall under capitalism, what would you answer? What is the evidence? Note it is not a simple question. During periods when it falls what is the Marxist explanation for the decline?

Imagine that you are a government advisor during the COVID-19 crisis when there is a large recessionary gap. You are working on the governments fiscal stabilization policy that will be implemented as the crisis subsides. What are the government’s options in terms of government spending G? What are the pros and cons of each option? (Hint: consider whether you expect private aggregate demand to rebound quickly after restrictions are lifted.)

Please respond to the following in a minimum of 175 words:

Compare and contrast expansionary and contractionary fiscal policy?

Consider a market for used cars. Suppose that each car on the market is 1 of seven possible levels of quality x={1000,2000,…,7000}. There is an equal amount of cars at each quality level. Each current owner (and potential seller) knows the quality (x) of the car that they have. (Note: We did not do a problem like this explicitly in class, but it is a very simplified version of the “A” insurance example from the notes.)

a. Suppose that buyers cannot observe or verify the quality of the cars. Let p* be the equilibrium price of the cars which is equal to the average quality of the cars on the market. Suppose all the cars are on the market currently. What is p*, and is it sustainable as an equilibrium price?

b. Find the value of p* that can be sustained as an equilibrium price? Which cars are sold? (Hint: Think about adverse selection).

c. How can this adverse selection problem be mitigated?