Q4. There are four consumers A, B, C and D who can potentially buy three goods—1, 2, and 3. All three goods are made by a monopolist who incurs a production cost of $40, $40 and $80, respectively, for these goods. Consumers’ reservation prices for these goods are as shown in the following table:

1 2 3

A 150 90 60

B 90 90 90

C 60 80 100

D 80 60 120

(a) [3] What are the optimal prices under a la carte pricing?
(b) [2] What is the optimal price under pure bundling?
(c) [8] What are the optimal prices under mixed bundling?
(d) [6] Calculate Total Consumer Surplus in each of (a), (b) and (c)
(e) [6] Between (a), (b) and (c) which creates the highest total surplus?

1. Consider the utility function of U(X,Y) = X^0.2Y^0.4

1. Derive the Marshallian demand curve for X
2. Derive the Hicksan demand curve for X
3. What is the own-price elasticity for X?
4. What is the income elasticity of X?
5. What is the price elasticity of X with respect to y (P_y)
6. If the income level is 120, then what is the P_xthat maximizes total spending
7. Show that Slutsky equation holds
8. Show that e_x,px+e_x,py+e_x,I=0.  What does it mean?
9. Show that Engle Aggregation holds.  What does it mean?
10. Show that Cournot Aggregation holds.  What does it mean?

when it comes to crime and privacy protection in the workplace do private employees have a reasonable expectation of privacy? what about public employees?why or why not? what is the test for tort of invasion of privacy? if managements interest is to make sure its employees are productive can management monitor computers workstations phones et cetera? why or why not?

7. What were the purposes and strategies of President Johnson’s Great Society and War on Poverty programs?

8. How did the Vietnam War transform American politics and culture?  How did the war cause controversy at home and abroad?

The marginal damage function for carbon monoxide pollution in two regions is given by MDR = 5ER and MDU = 10EU MDR = marginal damage in rural region, ER is the emission in the rural region MDU = marginal damage in urban region, EU is the emission in the urban region The marginal abatement cost in rural region is MACR = 600 – 5ER The marginal abatement cost n urban region is MACU = 600 – 5EU

(i) Calculate the socially efficient level of emission and the MAC at the socially efficient in each region.

(ii) Suppose the regulatory authority imposes a uniform standard at the emission level mid-way between the two socially efficient emission levels (i.e. ½(ER+EU) you calculated in (i) above. Calculate the excess damages from under-control of damages in the urban region and over-control of damages in the rural region. (Hint: first calculate the MAC and MDR and MDU at the mid-way level and then compute the change in total damages in each region relative to the socially efficient levels obtained in (i) above).

You are in the market for a new refrigerator for your company’s lounge, and you have narrowed the search down to two models. The energy-efficient model sells for $6,000 and will save you $200 at the end of each of the next five years in electricity costs. The standard model has features similar to the energy-efficient model but provides no future saving in electricity costs. It is prices at $5,000. Assuming your opportunity cost of funds, i..e. the interest rate, is 6 percent, which refrigerator should you purchase?   Provide a detailed and concrete reason for your answer.  

1. Which of the following is NOT a potential source of monopoly power?

a) patents and copyrights

b) control of scarce inputs

c) mark-up pricing

d) government franchise

2. A good is considered to be inferior of

a) the price elasticity of demand is between zero and one

b) the income elasticity of demand is negative

c) a cheaper good serves as a perfect substitute

3. Flynn Rider operates a falafel stand in the kingdom of Corona. As the only seller of falafel. Flynn serves the entire market (inverse) demand of P=250-2Q. Flynn has a constant average and marginal cost of $0.50 per serving with no fixed costs. Flynn's marginal revenue function is given by:

a) MR= 500-2Q

b) MR=-0.5Q

c) MR=250-4Q

d) P= 250-4Q

e) MR=250-Q

4. Flynn Rider operates a falafel stand in the kingdom of Corona. As the only seller of falafel. Flynn serves the entire market (inverse) demand of P=250-2Q. Flynn has a constant average and marginal cost of $0.50 per serving with no fixed costs. Flynn's profit maximizing monopoly output is

a) 62.375 servings

b) 187.125 servings

c) 249.75 servings

d) 124.5 servings

e) 166.67 servings

5. If the price elasticity of demand is -0.75, the, what change in price would cause quantity demanded to rise by 20%?

a) 15% increase in price

b) 26.67% increase in price

c) 15% decline in price

d) 19.25% decline in price

e) 26.67% decline in price

6. A natural monopoly has

a) less market power than a created monopoly

b) a long-run average cost curve that is everywhere upward sloping

c) diseconomies of scale

d) control of natural resources used in production

e) a lower average cost of producing the market demand than two or more firms would have

7. If the (inverse) demand for peanuts at a baseball game is given by P=5-0.02Q. What price will maximize the vendor's revenues?

a) $125

b) $5.00

c) $2.50

d) $12.50

e) $1.25

Please define characteristics of competitive markets.  Please compare and contrast the four types of market structures

1. Imagine students could opt to have their student loans paid in euros. What would the long-term effect on the balance of payments be? Would it make a difference if the students immediately opted to do a year’s study as a foreign exchange student in the Eurozone?
2. 1) Using a diagram, show how the government can intervene in the forex market to maintain a fixed exchange rate. 2) When would it become necessary to devalue the currency?
3. Given the exchange rates between the UK pound and the US dollar and between the UK pound and the euro, how can the exchange rate between the euro and the dollar be calculated?

(Article 9.4) Match each of the following growth and development policies that countries might choose to either Developmental State or Neoliberal.

Suppose Andy can make 20 loaves of bread in a day, or 4 dresses in a day.

1. Write down his production possibilities frontier equation, and then graph it.
2. Explain what the line itself represent, what the area under the line represents, and what the area above the line represents.

1. a. Within the Aggregate Demand-Aggregate Supply Macroeconomic model, discuss in general the difference in the impacts on nominal and real variables in the long and short run.

1. b. Compare the effects of an aggregate-demand-induced recession with an aggregate-supply-induced recession (no diagram necessary). How would you recognize that a recession is induced by demand or supply? What policies would be appropriate in each of the two cases?

Consider the relationship that links the Net National Investment to the savings of different economic sectors. Explain how the federal government budget deficit and the country’s trade deficit are connected.