2. The production function is given as Q=LK1/2 with K fixed at 4 units. Note K1/2 is same as the square root of K.

a. Draw the total, average and marginal product associated with this function.

b. Write down the equations for total cost, total fixed and total variable cost when w=2 and r=3, and draw the respective diagrams.

c. Write down the equations for AFC, AVC, MC and ATC corresponding to the values of w and r as in part b, and draw the respective diagrams.

d. Using duality, answer to part a, and words, explain the shapes of AVC and MC drawn in part c.

e. If r = 4, which of the cost curves (TC, TFC, TVC, AFC, AVC, AC and MC) will change and why? (4 points)

For the case study above, create a PERT schedule with the key activities for the $20 million contract negotiation project. There should be between to activities identified from the case study. Additional relevant activities may be included. Create an AON network diagram and find the critical path using slack once estimated activity time is established.

The rule of 70 (which provides an estimate of the amount of time it will take for some variable, like money holdings to double) can show us how during a drastic inflation

a. money’s usefulness as a store of value is destroyed.

b. the relative value of products falls as inflation continues.

c. the relative value of products change.

d. the amount of money in everyone's bank accounts will double.

Assume that an economy experiences an adverse supply shock that causes stagflation (simultaneous decrease in output (increase in unemployment) and increase in prices). In your opinion, should the government use expansionary or contractionary fiscal policy to address the situation? Explain your answer, mentioning the tradeoffs that each of the policies involves?

List some factors that might be responsible for the rising health care costs in the US. You must use evidence to support your case and make sure to cite properly?

Article 8 of the US Consitution empowers Congress, in part, "To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries."

In several paragraphs, discuss whether in your view the patent & copyright system in the United States is perfect as it is, or if it should be modified, and in what way. Please justify your response with evidence from an academic-level outside source.

Effect on demand and supply due to the onset of a pandemic

Tom, the only steel drum manufacturer in Narnia, can sell a single drum for $30. However, for every extra drum he wants to sell, he is forced to reduce the price (for all his customers) by $2. The total fixed costs in his workshop are $15, and the variable cost of the first drum produced is $25. For each extra drum thereafter, the cost drops by $5 up to, and including, the fifth drum. After that, the cost of each extra drum increases by $5.

What is Tom’s profit-maximizing output, price, and total profit or loss?

Output:

Price: $   

Profit/loss: $

Use and aggregate supply (upsloping range) and aggregate demand diagram to demonstrate the following. For each problem state the determinant and what happens to the price level and RGDP.

1. Consumer confidence grows for third straight month.

2. A technological breakthrough lowers the cost of energy.

3. the government engages in a new highway building program.

4. A series of natural disasters disrupt production and delivery of goods.

5. Laws are tightened to make immigration more difficult and this leads to labor shortages.

6. interest falls.

7. Productivity rises

8. Labor strikes cause an interruption in shipment of parts

9. Increased graduation rates for schools lead to more-skilled workforce.

10. Stock and bonds markets soar

Suppose that the MD = 5E and with its current technology, the firm’s MAC is given by MAC1 = 200 – 5E.

a) Determine the socially optimal level of emissions E.

b) Determine the emissions tax that would achieve the socially optimal level of emissions.

Now suppose the firm can adopt a new technology that changes is MAC to New MAC2 = 160 – 4E Calculate change in costs for the firm from adopting the new technology when:

c) The government uses an emissions standard equal to your answer in (a) above

d) The government uses an emissions tax equal to your answer in (b) (Assume no change to standard or tax rate after the change in technology)

Now suppose the government adjusts the standard and/or the tax such that MD = New MAC. Calculate the change in total costs for the firm from adopting the new technology when:

e) The government adjusts the standard, and

f) The government adjusts the tax rate

Pricing Strategies for Firms with Market Power — End of Chapter Problem

The most popular movie streaming service is Netflix. Netflix members pay a monthly fee and are then entitled to stream as many hours of programming as they wish. You’ve been hired by Netflix to determine the profit-maximizing monthly fee. You estimate that each customer’s inverse demand for streaming is given by P=0.56−0.0112QP=0.56−0.0112Q, where Q is measured in hours of streaming time. (You may assume Netflix can provide an hour of streaming at essentially zero marginal cost.)

a. How many hours, Q, will each customer stream each month?

35

50

40

55

b. What is the most you should charge for a monthly Netflix membership?

$22

$14

$17

$20

Kip’s Auto Detailing has locations in two distant neighborhoods, Uptown and Downtown. Uptown customers’ demand is given by QUT=1,000−10PQUT=1,000−10P, where Q is the number of cars detailed per month; Downtown customers’ demand is QDT=1,600−20PQDT=1,600−20P. The marginal and average cost of detailing a car is constant at $20.

a. Determine the price that maximizes Kip’s profit if he prices uniformly in both markets. How many customers will he serve at each location? What are his total profits?

P = $

Q_UT =

customers

Q_DT =

customers

Profit = $

b. Suppose Kip decides to charge different prices at each location. What price should he establish in each location? What are his total profits?

P_UT = $

P_DT = $

Profit = $

c. How big are the gains to Kip’s differential pricing scheme?

$333.66

$999.33

$666.66

$500.33

View "Consumer Purchasing Decisions" and "Technology and Consumer Behavior." Based on your review of this chapter, you know that consumers demonstrate specific behaviors as they work toward purchasing a specific product. In addition, the text points out that consumers can arrive at a specific buying decision based on previous experiences with a specific product, a newfound awareness of the usefulness of a particular new product, positive reviews form customers who have previously purchased the same product, etc. Based on your understanding of the consumer buying process, compare and contrast how the consumer buying process and the organizational buying processes differ. Illustrate your ideas with specific real-world examples. In replies to peers, discuss whether you agree or disagree with the way your peers have differentiated between the two buying processes.

Question 1: [55 marks]

When we derived money demand function in class, we assumed that money demand

depends on income and interest rate. Consider an economy that its money demand does not

depend on income and is only a function of interest rate.

M

d

=

L

(

i

)

Suppose that the economy is an open economy that is on a áexible exchange rate system.

1. Draw the money demand and supply curves with money demand and supply on x-axis

and interest rate on y-axis. [3 marks]

2. Show what happens to money demand and supply curves if income changes. [2 marks]

3. Derive the

LM

curve. [5 marks]

4. Derive the

AD

curve. [5 marks]

5. In response to the COVID-19 crisis, suppose that the government of the

ABOVE

ECONOMY

increases transfer payments to help people struggling during the COVID-

19 pandemic.

(a) Show the short run e§ects of this policy using the

Five-Figures Diagram

we drew in class; goods market, money market, the

IS

-

LM

curves, the interest

parity condition curve, and the

AS

-

AD

curves. Explain your answer. [8 marks]

(b) How about the e§ects of this policy in the medium run? Assume that before

and after the changes, the economy is still in a recession (i.e. its output is below

its natural level). To answer this question, draw the

Two-Figures Diagram;

the

IS

-

LM

curves and the

AS

-

AD

curves. Explain your answer. [5 marks]

(c) Do you think this policy is su¢ cient to compensate for damage done to the

economyís production and consumption of goods and services during the epi-

demic? Explain your answer. [2 marks]

6. In response to the COVID-19 crisis, suppose that the foreign government increases

investment in new hospitals. Show the short run e§ects of this foreign policy on the

ABOVE ECONOMY

using the

Five-Figures Diagram

we drew in class; goods

market, money market, the

IS

-

LM

curves, the interest parity condition curve, and the

AS

-

AD

curves. Explain your answer. [10 marks]

7. Suppose that the central bank of the

ABOVE ECONOMY

lowers its target for the

overnight rate and buys government bonds to provide support to the economy during

the COVID-19 pandemic.

2

(a) Show the short run e§ects of this policy using the

Five-Figures Diagram

we drew in class; goods market, money market, the

IS

-

LM

curves, the interest

parity condition curve, and the

AS

-

AD

curves. Explain your answer. [8 marks]

(b) How about the e§ects of this policy in the medium run? Assume that before

the changes, the economy was at the natural level of output. To answer this

question, draw the

Two-Figures Diagram;

the

IS

-

LM

curves and the

AS

-

AD

curves. Explain your answer. [5 marks]

(c) The more the central bank buys, the lower the interest rates that the govern-

ment has to pay on new borrowing, and the more the government can borrow.

Does this mean the government can spend as much as it wants and protect the

economy from damage done by the virus? Explain your answer. [2 marks]