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

PLEASE GIVE ME LONG AND DETAILED ANSWERED (with specific examples) - Both Answers Combined Should Be About a A4 Paper Long. Thank you.

Prior to the current Covid-19 travel advice the Department of Foreign Affairs and Trade (DFAT) Smart Traveller website had the following advice for Australians. “Venezuela has closed its land borders with Brazil and Colombia and maritime borders with Aruba, Curaçao and Bonaire until further notice. The political and economic situation remains very unstable. Monitor local media and follow the advice of authorities. We continue to advise you not to travel to Venezuela.”

(i) Assuming COVID-19 does not exist at this time what would your advice be to an Australian company that has just won a major and highly profitable project management contract? Please provide a sound rationale for your advice.

(ii) What other sources of political risk can an exporter face and how can they be counteracted? Please provide specific examples in support of your answer.

What are the short-run and long-run effects of monetary tightening on nominal interest rate? 12. Ture of False (based on Question 11 above): In the short run, normal interest rate does not rise as much as the real interest rate. (Please justify)

11. What are the short-run and long-run effects of monetary tightening on no minal interest rates? (Please justify)

8. What is the relationship between real money demand and interest rate? (Please justify)

If you purchased shares of common stocks in 1990 for $2,000 and sold them for $3000 in 2001 you would be liable for capital gains taxes on?

4. Poway is a town that has 70 families with a child, and 30 without a child. 30 of the families with a child are willing to pay as much as $6,000 to educate their child, and 40 are willing to pay as much as $4,000 to educate their child. Each educated child creates a positive externality of $30 for each family in Poway but the cost of educating a child in Poway is $5,000.

(a) Without regulation, how many residents educate their child?

b) With regulation, how many residents educate their child?

c) What is the change in social profits by regulating the externality?

Residents of the town of Los Locos (population 100) like to drive noisy off-road vehicles, but they hate the disturbance and dust caused by each others’ vehicles. Each vehicle purchased by a resident causes $10 worth of damage to each of the 100 residents. Forty residents are willing to pay up to $3,500 for an off-road vehicle, 20 residents are willing to pay up to $3,000 for an off-road vehicle, and 40 residents are willing to pay up to $2,500 for an off-road vehicle. The price of an off-road vehicle is $2,200.

(a) Without regulation, how many residents buy an off-road vehicle?

(b) With regulation, how many residents buy an off-road vehicle?

(c) What is the change in social profits by regulating the externality?

Many make the argument that although perfectly competitive markets achieve the highest level of social welfare, because markets are never perfectly competitive, society is worse off from using market-based systems. Discuss whether you agree or disagree with this statement

Fixed Exchange Rates a. Assume that Canada adopts a fixed exchange rate and that there is a rise in the world interest rate (Rw). Explain the impact on the money supply and foreign reserves of the Bank of Canada. Can policy makers use domestic open market operations to counteract the impact in any way?

b. Suppose there is a one off rise in the foreign price level P*. Assuming the Purchasing Power Parity holds, use the DD-AA model to show that the exchange rate will rise immediately in proportion to the rise in P*. How will this impact the internal and external balance of a country, assuming that it is in balance before the rise in P*?

c. If domestic and foreign currency bonds are perfect substitutes and investors’ preferences change such that they want to hold more foreign currency bonds how does this impact the risk premium on domestic bonds? Does a floating or fixed exchange rate minimize the impact on output and why?

Suppose that a firm uses labour and capital in production. The wage rate is $10 per unit of labour and the rental cost of capital is $10 per unit. The firm is currently producing 100 units of labour and the rental cost of capital is $10 per unit. the firm is currently producing 100 units of output by using cost minimizing input combination of 50 units of labor and 50 units of capital.

On an isoquant and iso-cost diagram, show than an increase in output from 100 units to 150 units will result in higher short-run total cost, average cost and marginal cost than in the long-run counterparts.