Consider a two-period model, inhabited by two individuals, Anna and Bob (or as they like to be called, A, and B). A has the following preferences uA(cA0, cA 1 ) = ln(cA 0 )+0.9 ln(cA 1 ), while B has the following preferences uB(cB0, cB 1 ) = ln(cB0)+0.8 ln(cB1 ). Consumer A receives an income YA0 = 100 in period 0 and YA1 = 150 in period 1. On the other side, Consumer B receives an income YB0 = 125 in period 0 and YB1 = 100 in period 1. Assume the interest rate is r. The government wants to spend G0 = 50 in period 0 and G1 = 75 in period 1. These spendings are financed through lump-sum taxes. It is assumed that the government collects the necessary tax to finance its spending in each period and the tax burden is equally supported by the consumers in each period.

1. Compute the optimal consumption (c0, c1) for each individual as a function of the interest rate r.

2. Find the equilibrium interest rate that clears the credit market.

3. Discuss the validity of the following statement with using economic terms and tools:
“Economic models play an important role when it comes to developing sound economic policies.”


(Microeconomic Theory II concepts)

In the 2020 political election cycle, the role of the government in the economy is being heavily debated with some arguing that less is needed whereas those that contend that the government should involve more. The recent events of Corona Virus pandemic highlights the dilemma of less vs more government. Using the chapter in the textbook and other sources compare and contrast the role of the government in the marketplace. Use arguments that support a greater role of the government and contrast with why this role should be less or minimum. Is there a healthy balance? Explain.

Two alternative start-up FinTech projects were being contemplated for financing by a venture capitalist to determine which one is more viable, based on cost and returns. Table 4.1 below shows a five-year schedule for the two projects:

Table 4.1

1. If you were the Project Manager on the Venture Capitalist team, using the Net Present Value (NPV) method, which project would you recommend be financed based strictly on the schedule shown above and an interest rate of 7.5%?
2. Use a Microsoft Excel, or any other method to deduce/calculate the Internal Rate of Return (IRR) for both projects. Explain how you would advise the Bank which project to finance using the result from the IRR method?

16. Which of the following would you expect to have the least market power?

A. A wheat farmer

B. A gasoline station in a small rural town

C. A small biotech company with a patent on a drug

D. All of the above would have equal market power

E. None of the above would have any market power

17. When a monopolist switches from charging the monopoly price to price discriminating, which of the

following is/are true?

A. producer surplus will increase.

B. consumers with high elasticity of demand will be charged a lower price than consumers with

low elasticity of demand.

C. if the quantity sold increases, then total surplus will increase.

D. all of the above.

E. none of the above.

18. Contracting around observable characteristics to try and solve information problems are examples of

A. first best efficient outcomes

B. second best efficient outcomes

C. positive externalities

D. negative externalities

E. creative destruction

19. If a firm with market power lowers its price,

A. it will increase total revenue regardless of the elasticity of demand.

B. it will decrease total revenue regardless of the elasticity of demand.

C. it will always increase its profits.

D. it will increase profits if the resulting marginal revenue is greater than the marginal cost.

20. The Coase Theorem can be summarized by saying the efficient allocation of resources will be guaranteed

as long as 2 conditions are met:

A. Clearly defined property rights and no market power

B. No market power and low transaction costs

C. low transactions costs and clearly defined property rights

D. perfect competition and no government intervention in the market

E. government taxation of negative externalities and subsidies for positive externalities.

21. A Nash Equilibrium is

A. a best-response to a best-response

B. a set of strategies for which no player has an incentive to choose a different strategy

C. the guaranteed outcome of a game.

D. all of the above

E. A and B

What was the actual impact and historical significance of the meat/food industry brought about by The Jungle by Upton SInclair?

Perfectly competitive market has many characteristics. Explain in details those characteristics. Discuss why most industries are not perfectly competitive.

Writing a report on the economic 2030 vision of the Kingdom of Saudi Arabia

please should it be about 2000 words  

1. True or False: In a transitional gains trap, both the suppliers of the good and the consumers of the good are worse off because of the initial barriers to entry imposed on the market.   and why?

A confectioner (a candy maker) and a dentist run their business in two separate but adjacent houses. The confectioner operates two loud machines in his house. The noise from the machines had gone unnoticed for years until the neighboring dentist decided to move his office to the room closest to where the confectioner operated his machines. The noise from the machines makes the dentist’s work impossible. The dentist sues the confectioner in court.

Suppose now that confectioner has three ways of dealing with the problem
of his noisy machines interfering with the dentist’s business: 1) to sound-proof the wall
between the houses at a cost of $20K; 2) to switch to quieter, but more expensive,
machines, at a cost of $30K; or, 3) to relocate at a cost of $100K.
The dentist, on the other hand, has two ways of dealing with the noise problem: 1) to
sound-proof his entire office for $25K; or, 2) to remodel his house again and move his
office back to the previous side of the house and away from the noise at a cost of $40K.
Suppose that in this scenario a merger is not possible, and that the transaction costs are
zero.
c. If the court rules in favor of the dentist, then what would be the resulting
outcome? Explain.
d. Assuming away subjective considerations of justice, morality, etc., did the court
make the economically efficient ruling here? Why or why not? (You must relate
your answer here to part (c) above).
e. Briefly, state the outcome if the court rules in favor of the confectioner instead?

List and explain the factors that influence price elasticity of demand. What will make demand more or less elastic?

Explain the relationship between price elasticity and total revenue.

Define and explain how marginal, total and average values are related in general and specifically for utility, product, cost, revenue and profit.

Explain why diminishing marginal utility is related to the Law of Demand.

Explain the difference between economic and accounting profit.

Explain why increasing MC is related to the Law of Supply.

Explain how differences in market structure (perfect competition, monopoly, monopolistic competition and oligopoly) affects how a firm perceives the demand curve and marginal revenue, and thus profit maximizing output and overall efficiency (price relative to marginal cost).

Explain how barriers to entry and long term price and profitability (P-AC) are related, and how that might impact antitrust and regulatory policy.

A confectioner (a candy maker) and a dentist run their business in two separate but adjacent
houses. The confectioner operates two loud machines in his house. The noise from the machines
had gone unnoticed for years until the neighboring dentist decided to move his office to the
room closest to where the confectioner operated his machines. The noise from the machines
makes the dentist’s work impossible. The dentist sues the confectioner in court.
Now, consider the following two scenarios:
Scenario 1: Suppose that the value of the dentist’s clinic is worth $130K,
whereas the value the confectioner’s candy business is worth $70K.
Scenario 2: Suppose that the value of the dentist’s clinic is worth $150K,
whereas the value the confectioner’s candy business is worth $180K.
Consider each of the scenarios above when answering the following questions. Assuming
that it is possible for either business to buy the other (i.e. to merge) or to buy the
nuisance rights after the court decision (i.e. the right to emit sound or to demand quiet),
what would be the outcome if…
a. …the court rules in favor of the confectioner, and transaction costs amount to
25K.
b. …the court rules in favor of the dentist, and transaction costs amount to $60K.

What are the signs that a business model is failing and is ripe for a disruption? Elucidate your answer in the following context – “e-Learning platforms are going to disrupt traditional education industry”.

Assume the base year is given as 2017 and the market basket for the consumer price index has two products–meat and potatoes–with the values in 2017 and 2018 for price and quantity given by the table above. The Consumer Price Index for 2018 equals

2)

If the price index in an certain economy rises in three consecutive years from 100 to 120 to 140, then such an economy is experiencing