1. If the Price Elasticity of Demand (PED) = 1 then…

1. Price should be decreased to maximize revenue.
2. Price should be increased to maximize revenue.
3. Revenue is at its maximum.
4. Profit is at its maximum.

2. If the demand for good X shifts to the right as the price of good Y rises, then goods X and Y are:

1. Inferior goods.
2. Complementary goods.
3. Normal goods.
4. Substitute goods.

3. Which of the following is not a determinant of Price Elasticity of Demand (PED)?
   1. The availability of close substitutes.
   2. Time horizon: the passage of time.
   3. The proportion of income spent on the good.
   4. The preferences of sellers.

4. The concepts of Utility and Marginal Utility are only applicable for:

1. Markets for two goods.
2. All the consumers of one good or service
3. An individual consumer or household.
4. None of the above.

5. An explicit cost is …

1. A variable cost that increases with quantity.
2. A fixed cost that does not increase with quantity.
3. A cost that involves spending money.
4. The same as an opportunity cost.

Write an essay about the covid-19 shutdown. How an economist would view this situation, and what would be their perspective of what is happening to the economy?

Please research the term – “Demographic Dividend”. What does it mean? Have any countries actually experienced this? Do you think that others will follow? Write about what you find – you just need a couple of examples here, not the full list of countries that have may have realized this dividend. Make sure you address how this concept (of a demographic dividend) relates to any of the stages of demographic transition we’ve discussed in class. And feel free to include age pyramids of countries if you’d like, with proper citation of course.

List the five keys of Bill Gates plan to deal with an epidemic!

12.AGGREGATE DEMAND AND AGGREGATE SUPPLY

a. What is the economic reason why the SRAS curve slopes up?

b. Name some factors that could cause AD to shift, and say whether they would shift AD to the right or to the left.

c. Would a shift of AD to the right tend to make the equilibrium quantity and price level higher or lower? What about a shift of AD to the left?

d. Suppose concerns about thesize of the federal budget deficit lead the U.S. Congress to cut all funding for research and development for ten years. Assuming this has an impact on technology growth, what does the AD/AS model predict would be the likely effect on equilibrium GDP and the price level?

e. Suppose Mexico, one of our largest trading partners and purchaser of a large quantity of our exports, goes into a recession. Use the AD/AS model to determine the likely impact on our equilibrium GDP and price level.

f. What impact would decrease in the size of the labor force have on GDP and the price level according to the AD/AS model?

g. Suppose the Federal Reserve increases the supply of money. What impact would that have on GDP, unemployment, and inflation?

Note: these questions are based on OpenStack, Chapter 11(link on Canvas). You are recommended to draw the relevant AD & AS graph to accompany each answer.

Given the information below:

     r_d = 10% Municipal Bonds = $11,700,000       Household CD’s = $32,250,000

     Transactions Deposits = $72,150,000      Savings Deposits = $125,250,000     Vault Cash = $4,160,000

     Secondary reserves = $14,000,000           Bank deposits with the Fed = $22,500,000

Determine:

a) the level of required reserves, excess reserves, and the level of total reserves.

b) the maximum deposit outflow a bank can sustain without having to acquire additional reserves.    

Explain the relationship between pricing tools and theories of consumer behaviors; on luxury items in the fashion industry.

response must range from 300-400 words

Which do you think will decrease consumption more: a 10 percent decrease in after-tax income or a 10 percent decrease in stock market values? Explain

Question 1:

A football club is the only one in its region and is therefore able to behave like a monopolist.

It sells tickets to Adults (?) and Juniors (?), whose demand curves are given by:

?_! = 100−?_!

?_" = 80−?_"

Additionally, the club’s total costs are given by ?? = 10?

1. Initially, the club sets its price by charging all supporters the same price, according to the aggregate market demand curve. Calculate the maximising output, price and the resulting profit for the club as well as consumer surplus.

2. The club hires an economist to consider its pricing strategy and receives the advice that it should charge different prices to each type of supporter. Find the prices it sets in both markets, the sales (output) in each and its overall level of profit and illustrate profit maximising outputs and prices of each consumer type on a graph (one graph for each type of consumer). Calculate consumer surplus in this case.

3. What conditions must be satisfied for a producer to be able to implement a policy of price discrimination?

Question 2:

The following table presents the price, output and profits for identical firms at industry and firm level. Suppose there are currently four firms in the market and two are proposing to merge (firm 3 and 4). Assume that the remaining three (the one merged firm plus the two unmerged firms) continue to exhibit Cournot behavior.

a) Explain the merger paradox using data from the table below. How the merged firm (firm 3 and 4) will be worse off?

b) How would this outcome differ if all four firms merged?

c) Explain what is the motivation for two firms to merge.

Output is measured in thousands of units and profits are measured in thousands of pounds per week.

Question 3:

Consider a market with two identical firms, Firm A and Firm B. The market demand is ? = 20−^#$ ?, where ? = ?_% +?_& . The cost conditions are ??_% = ??_& = 16.

a) Assume this market has a Stackelberg leader, Firm A. Solve for the quantity, price and profit for each firm. Explain your calculations.

b) How does this compare to the Cournot-Nash equilibrium quantity, price and profit? Explain your calculations.

c) Present the Stackelberg and Cournot equilibrium output using a diagram.

4. The crude oil market can be described as a Nash-Cournot market, in which Saudi Arabia acts as Stackelberg leader. Do you agree with this statement?

Tom Hanks was stuck in an island alone. Until somebody comes to rescue him, he has to live alone and fight for survival in the island. Tom considers two things essential to his survival, rest (R) and food. The only food Tom can eat in the island is Fish (denoted by F).

Tom’s utility function is: U(R,F)=R.F

In order to get fish, Tom has to spend time fishing. The following production function gives the relationship between time spent by Tom in fishing and the number of fishes Tom can collect. Production function: F(T)=T ^(1/2)

Tom has a total of 24 hours in a day, so R+T=24.

How much time will Tom spend on fishing and how much fish will Tom consume?

1. Suppose the inverse demand function for a monopolistically competitive firm’s product is given by

? = 100 − 2?
and the cost function is given by ?? = 52 + 4?

1. Determine the profit-maximizing price and quantity

2. Determine the maximum profits.

3. Can we say that this firm is operating in the long-run or short-run equilibrium at the equilibrium price and quantity?

2. Suppose the inverse demand for a monopolist’s product is given by ? = 110 −

The monopolist can produce output in two plants. The marginal cost of producing in plant 1 is ??! = 3?!, and the marginal cost of producing in plant 2 is ??" = 2?".

1. How much output should be produced in each plant to maximize profits?

2. What price should be charged for the product?

A Cournot oligopoly consists of four firms, each with a marginal cost of production of MC=10. The market demand curve is given by Q=(100-P)/3 . The four firms are looking to merge into a single firm so they can increase their profit margin by taking advantage of scale economies. Suppose that after the merger, market demand remains the same but the marginal cost of production of the merged firm decreases to MC=4.

26. What is the change in net social welfare resulting from the merger?

      A. -$144

      B. $2,500

      C. -$850

      D. $380

      E.   $0