Suppose there are only two TV stations in Arecima, each broadcasting programming over the airwaves. Each station wishes to get the maximum number of viewers and each is considering whether to carry a reality-tv show or a comedy show in its 11pm slot on Saturdays. The 1000 Arecima residents have the following preferences: 800 of them wish to watch a reality-tv show and have no interest in a comedy show whereas 200 people would enjoy watching a comedy on TV but would go sleep if both stations chose to broadcast a reality tv show. Each station will receive half the audience if both broadcast the same type of show. Write down the `outcome matrix' of this game and find the Nash equilibrium. Is the equilibrium efficient? As usual, justify your answers.

One version of the rational action model of decision making is expected utility theory. Examine the major tenets of this theory. How are payoffs and probability handled by proponents of this theory? Explain?

Assume you have several years of student-level longitudinal data on math test scores, demographic characteristics, and what school each student enrolls in each year.

a. What would be the problem with simply comparing the math test scores of students attending a traditional public school with the outcomes of students who attend a charter school, even controlling for student demographic characteristics? Would this comparison yield the causal effect of attending a charter school on math test scores?

b. Some charter schools are oversubscribed, and by law they are required to admit people by lottery. How would you use the lottery data to overcome selection problems? Would this method tell you how an average charter school affects math test scores?

In the credit market model with limited commitment, suppose that a consumer's collateral constraint is binding, and suppose that the consumer's current taxes fall, with an increase in future taxes that leaves lifetime wealth unchanged for the consumer. How does this affect the consumer's behavior? Explain.

1)Briefly explain what school accountability policies are and provide the economic arguments that support these policies.

2) Describe the No Child Left Behind Act. What was its original intent, how does it mandate that states assess adequate progress, and what are the sanctions that schools face if they do not meet these goals?

(b) What are the advantages and disadvantages from an overall economic perspective of using monetary financing to fund budget deficits as opposed to governments borrowing from markets in the usual way? Fully explain 5 advantages and 5 disadvantages

Explain a trend and the main reason for boards of directors and shareholders becoming more active in the operations of publicly held corporations

Suppose an agent has preferences represented by the utility function:

U(x₁, x₂) =1/5 ln (x₁) + 4/5 ln (x₂₎

The price of x₁ is 6 and the price of x₂ is 12, and income is 100.

a) What is the consumer’s optimal consumption bundle?

b) Suppose the price of x₂ is now 4, what is the consumer’s new best feasible bundle?

entrepreneur growth

1. Based on the following set of equations,

(1) AD=Y=Y*

(2) AD = C + G₀ + I

(3) C = C₀ + c1* YDIS

(4) Y^DIS = Y-T

(5) T=T₀ + tY

(6) I = I0 –er

0 <c1<1

0 <t<1

e>0

a)         Derive AD curve

b)         Draw AD curve

c)         Analyze, what will happen, if r (real interest rate) increases.

d)         Interpret coefficient e. Do you expect the value of this coefficient will be higher in the UK or Senegal?

e)         Based on point a), solve the equation for r variable.

f)         Based on point e), draw the function r = f(Y) (hint: r should be on the vertical axis, Y should be on the horizontal axis).

2. The real demand for money (Md = Md (nominal)/P) is expressed as a linear function:

(1) Md = kY-hr

(2) Ms = Md

a)         Explain the sign of coefficients k and h. What types of money demand do they refer to?

b)         Explain why there is no equation for the money supply.

c)         Using equation (1), express i as the function of Y (simply solve it for r variable).

d)         Draw the function obtained in point (c) on the same graph as in point 1.f).

3. Based on the graph you draw in point d), analyze the effect of the following events on the economy. Make sure to explain everything step-by-step.

EXAMPLE a) The central bank increases the money supply.

Ms increases => interest rate decreases => investment increases =>Y increases

On the graph: LM shifts to the right; at the new equilibrium point, Y increases, interest rate decreases.

b) The government increases taxes.

c) The government increases government spending.

d) MPC increases.

e) the tax rate decreases.

Using the IS-LM model, analyze the effect of the following events on the economy. Show the graphs and explain the changes step-by-step (Example: Increase in tax rate => Lower disposable income => Lower Consumption => Lower AD => Lower output/income => Lower money demand => Lower interest rate).

1. Due to the ongoing quarantine, the firms decreased autonomous investment.
2. The government initiated a massive infrastructural improvement program.
3. The Central bank increased its money supply.
4. The technological revolution on the financial market eased access to the financial market for investors (this one is more complicated, but please be creative yet reasonable).  

At a time when demand for ready-to-eat cereal was stagnant, a spokesperson for the cereal maker Kellogg’s was quoted as saying, “ . . . for the past several years, our individual company growth has come out of the other fellow’s hide.” Kellogg’s has been producing cereal since 1906 and continues to implement strategies that make it a leader in the cereal industry. Suppose that when Kellogg’s and its largest rival advertise, each company earns $0 billion in profits. When neither company advertises, each company earns profits of $8 billion. If one company advertises and the other does not, the company that advertises earns $48 billion and the company that does not advertise loses $1 billion. For what range of interest rates could these firms use trigger strategies to support the collusive level of advertising?

Using game theory, explain how actions by firms in their own self-interest can lead oligopolist firms to suboptimal (from the firms point of view) results.

Why oil prices dropped below zero, in the U.S.A future market contracts.

The Trump administration Tax Cut and Job Act lowered corporate tax from

35% to 21%. The Act also lowered individuals and households tax rate. Using the

long-run model of the economy developed in Chapter 3, State in words what happens

to: i. the real interest rate; ii. national saving; iii. investment; iv. consumption; and

v. output. (15 pts)