22. Consider a monopolistically competitive market. Despite producing differentiated products, suppose that each existing firm (and any potential entrant) has the same total cost function, given by TC=2200+100Q+Q². And despite producing differentiated products, suppose that each existing firm currently faces the same residual demand curve, given by Q=(320-P)/4.5 What will happen in the market over the long run?

      A. Number of firms will increase and residual demand of existing firms will shift leftward.

      B. Number of firms will decrease and residual demand of remaining firms will shift rightward.

      C. Number of firms will stay the same and residual demand of existing firms will not change.

      D. Number of firms will increase and residual demand of existing firms will shift rightward.

      E.   Number of firms will decrease and residual demand of remaining firms will shift leftward.

Suppose a given market is served by a monopoly with constant marginal cost, c. We know that 1st degree price discrimination increases total surplus compared to the outcome where the monopoly charges a single price, pm. One of the criticisms of this result is that price discrimination can be costly to the monopoly, e.g., because it must gather information on willingness-to-pay. Suppose the marginal cost with price discrimination rises to c' > c. Explain with words and a diagram whether total surplus is still higher with 1st degree price discrimination than a single price. What areas on your diagram must be compared?

President Trump promised many times that he would revive the economy through tax reform. His theory is that lower taxes on interest income would encourage people to save more of their income and that this would lead to higher rates of investment and faster economic growth both during his presidency and long afterward as a legacy.

Briefly evaluate this theory using the Solow model as an organizing framework.

“The Internet a typhoon force, a ten times force, or is it a bit of wind? Or is it a force that fundamentally alters our business?” (Andy Grove, 1996). 1- According to the meteorological analogy given by Mr. Andy Grove, Chairman of Intel, used with the Internet, discuss and explain how the results of using the network for businesses can vary from a company to another.

The market for iron is perfectly competitive and all existing producers and potential entrants are identical. Consider the following information about the price of iron.

Between 2000 and 2005, the market price was stable at $2/pound.

In the first three months of 2006, the market price doubled reaching $4/pound, where it stayed for the remainder of 2006.

Throughout 2007 and 2008, the price declined, eventually reaching $2/pound by the end of 2008. Between 2008 and 2012, the price remained stable at $2/pound.

Assume that technology has not changed and that input prices have remained constant over the period. Using ONLY words, explain this pricing pattern over the period.

3. Using the money supply (M1) model developed in class, explain the likely effects on the money supply of the following. Be sure your answer indicates what changes in the model. (4 points each)

a. the U.S. Treasury sells new U.S. bonds at auction and does not spend the proceeds

b. more stores are willing to accept debit or credit cards for transactions

c. banks start paying a higher interest rate on checkable deposits

DB: Market Structure Examples

This is the Discussion Board assignment for Unit #12. You will need to post your own response, and provide at least one thoughtful response to another student's post in order to receive full credit. For this Discussion Board, I'd like you to pick two of the four market structures covered in this Unit (perfect competition, monopoly, monopolistic competition, or oligopoly). For each of the two structures that you choose, I want you to provide one new example of a product (good or service) that is sold in a market that has that structure. Again, this should be a new example, not one that is from the readings, etc. You should provide a very brief defense of your choice.

So you need two examples, from two different market structures.

4. Evaluate: Income should be redistributed from the rich to the poor because the marginal utility of income is lower to the former.

Why is social progress important?

Why is regional development important?

What do you think:
are there any similarities between the development of Science and Technology Policy Research  in the European Union and in Ukraine?

1.

1. Explain the three key functions of the Bank of Canada
2. In the Canadian banking system, the target reserve ratio is 20 per cent and the estimated value of the cash drain ratio is 5 per cent. What is the total value of new deposits from a new deposit in a bank of $500.00? (show your calculations).

2

1. Explain the three basic functions of money.
2. Briefly explain how the bank of Canada could increase spending in the economy with an increase in the money supply using the reserve ratio requirements.

3

1. What are the two key approaches used in the new economic growth theories to explain why their theories are different from the established Neoclassical Growth theory
2. Explain the fundamental determinants of long-term economic growth for an economy

4 Consider the Canadian economy that is in long-run equilibrium with an output equal to Y*. The United States economy goes into a major slowdown causing a significant decrease in goods and services shipped into the United States from Canada. For Canada, answer the following questions:

1. What kind of shock occurred- aggregate demand or aggregate supply?
2. Explain how fiscal policies by the government of Canada can be used to drive the economy back towards Y* in the long run. Explain the steps

5 A review of the economic performance of the Canadian economy by economists at the Bank of Canada suggests that the economy has an inflationary output gap.

Explain how the Bank of Canada could use monetary policy instruments to close the inflationary output gap. Explain the process (mechanism) through which this occurs. (20 points).

1The public interest theory of regulation holds that

Group of answer choices

regulators are seeking to do and will do through regulation what is in the best interest of the public or society at large.

even though regulators seek to do what is in the best interest of the public at large, through regulation they end up doing what is in the best interest of the special interests of the industry that is being regulated.

even though regulators seek to do what is in the best interest of special interests of the industry that is being regulated, through regulation they end up doing what is in the best interest of the public at large.

regulators are seeking to do and will do through regulation what is in the best interest of the special interests of the industry that is being regulated.

2The Herfindahl index measures the

Group of answer choices

degree of concentration in an industry.

size of a market in terms of total dollar sales.

degree to which average variable cost is higher than average fixed cost at every level of output.

the amount of deceptive and false advertising in an industry.

none of the above

How can a central bank use monetary financing (ie helicopter money) to allow the government to run up a bigger budget deficit?

1Modern Justice Department guidelines evaluate mergers according to how they would change the industry's

Group of answer choices

Herfindahl index.

four-firm concentration ratio.

eight-firm concentration ratio.

twelve-firm concentration ratio.

2Which antitrust legislation made price discrimination illegal?

Group of answer choices

the Sherman Act

the Clayton Act

the Federal Trade Commission Act

the Robinson-Patman Act

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3The Sherman Act of 1890 was passed with the intent of

Group of answer choices

establishing the Federal Trade Commission (FTC) to deal with "unfair methods of competition."

preventing monopolization and/or conspiracy in the restraint of trade.

spelling out the conditions under which mergers would be considered anti-competitive.

dealing with false and deceptive advertising.

declaring interlocking directorates illegal.

Consider the following information as part of a breakeven analysis:

1. Cost of Production:

   Number of Units	Cost ($)
   0	o
   700	4,900

2. Cost of Buying

• What would be the equation for the production cost?
• What would be the equation for the buying cost?
• What is the breakeven # Unis?
• What is the breakeven amout?
• If you were only interested in 400 units, which option should be selected?
• If you were only interested in 200 units, which option should be selected?