Section I: Derivation of Hicksian Demand Curve

Joyce’s utility function is as follows:

U= 10X³Y²

Where, X, is the quantity of good X consumed, Y, is the quantity of good Y consumed and, U, is Joyce’s utility function.

The general budget constraint for the two goods is a follow:

B= P_XX + P_YY

Derive Joyce’s Marshallian demand equation for good X. Also compute her demand for good X when B= 500, and the price of good X is 1 and 2. Also draw the Marshallian demand curve for X at these prices.

What is Joyce’s optimal amount of good Y purchased if P_Y= 1 and P_x=1 and if P_x=2 and P_Y= 1?

Derive the Hicksian demand for good X at these prices. Hint, you need to choose the three correct equations you’ve derived above and solve simultaneously. Also, draw both demand curves on the same graph.

Using the information derived in parts A and B, what is the substitution effect and income effect obtained when changing the price of good x from a value of 1 to a value of 2.

(1) Propose a model that can explain why non-tradable goods and services are more expensive in rich countries. State carefully the assumptions of the model.

Use the classical model for determining the long-run outcome of the economy to answer the following question. Suppose a government in debt crisis (such as Greece) moves to reduce its budget deficit by reducing the annual funding for tertiary education and healthcare drastically.

(a) Graphically illustrate the impact of such a reduction in the government's budget deficit:

i. First, by assuming that the total factor productivity (TFP) does not depend on the government spending on health and education.

ii. Second, by assuming that the TFP increases with government spending on health and education but by a limited amount. [Be sure to label: the axes; the curves; the initial equilibrium values; the direction curves shift; and the terminal equilibrium values.]

(b) State and explain in words what happens to the real interest rate, national saving, investment, consumption, and output.

(c) Discuss the likely impact of such policy on the inequality of income between the educated and uneducated labour. Support your answer with graphical illustrations.

(d) Suppose the above policy causes a sudden emigration of workers with no education to neighbouring countries for easier access to education and health facilities. Assume TFP does not decrease following the government policy shock, as in part a (i), and following the labour migration. How would your answer to (b) and (c) change?

Find a company that has done a good job of creating customer loyalty and outline how they have done so and what they can do to improve going forward. How have they measured customer loyalty. (Need explanation and example please).

The unemployments number of US for 2019 is 3.7%, and for the year 2010 is 9.7%

explain why we observe such a contrast.

Difference between Granovetter’s view of economic and Adam smith economic behavior theory?

Suppose an economy under fixed (pegged) exchange rates is currently facing:

• a balanced current account (NX = 0),

• a negative output gap (excess unemployment), and

• a balanced budget.

• Using an NX/ (S-I) model depict the above situation in relation to the internal and external balance diagrammatically.

• Now suppose as an advisor to the government your recommendation is to employ an expenditure-changing policy to attain the Internal Balance. Explain in details what this policy is made up and what the consequences of your recommendations will be. Show diagrammatically and explain fully.

• In light of your answer above would you agree with this statement? “A trade deficit and low savings go hand in hand.” Evaluate fully.

• Defend this proposition “attaining the two policy objectives of internal and external balance requires two polices”. Explain and illustrate diagrammatically.

If Mamata was able to work 24 hours a day she could produce 4 tonnes of rice (the principal food crop cultivated in West Bengal) each day. You are told that Mamata’s utility maximising choice is to work for 8 hours and produce 3 tonnes of rice.

Now you are informed that Mamata is no longer an independent farmer. Instead, she works as a bargadar and rents the land on which she works from a landowner and keeps 75% of the rice that she produces (as is the case after the adoption of Operation Barga).

Q7 Using your answer to Q6 as a starting point, show (on a separate model) Mamata’s new optimal choice as a sharecropper. Again, be sure to label and define each of the relevant points and lines on your diagram. List each of the assumptions you made when developing your model.

Q8 Discuss how the models developed in Q6 and Q7 can be used by economists to evaluate the fairness of economic outcomes?

With the establishment of the World Trade Organization (WTO) in 1995 (previously General Agreement on Tariffs and Trade (GATT)) tariffs applied by many countries have been significantly reduced. Nevertheless businesses do still face problem because of the mushrooming of Non-Tariff Measures. discuss

examples of where a country/Today/ has an Absolute Advantage, and why there is an increase in Comparative Advantages in today's economy.'