Amidst the current pandemic, how can supermarkets adjust how they go to market on grocery product categories such as grab-and-go/convenience items?

1. Suppose the market demand for rutabagas is Q_D = 10 - 0.25P and the Q_S = 0.15P, where P is the price per box of rutabagas and Q measures the quantity of boxes. What is the equilibrium price of rutabagas?

2. Suppose the market demand for rutabagas is Q_D = 10 - 0.25P and the Q_S = 0.15P, where P is the price per box of rutabagas and Q measures the quantity of boxes. What is the equilibrium quantity of rutabagas?

3. Suppose the market demand for rutabagas is Q_D = 10 - 0.25P and the Q_S = 0.15P, where P is the price per box of rutabagas and Q measures the quantity of boxes. Suppose the government assesses a rutabaga tax of $5 per box on the sellers of rutabagas. What is the after-tax equilibrium quantity of rutabagas?

4. Suppose the market demand for rutabagas is Q_D = 10 - 0.25P and the Q_S = 0.15P, where P is the price per box of rutabagas and Q measures the quantity of boxes. Suppose the government assesses a rutabaga tax of $5 per box on the sellers of rutabagas. What is the after-tax price paid by the consumers of rutabagas

5. Suppose the market demand for rutabagas is Q_D = 10 - 0.25P and the Q_S = 0.15P, where P is the price per box of rutabagas and Q measures the quantity of boxes. Suppose the government assesses a rutabaga tax of $5 per box on the sellers of rutabagas. What is the after-tax price received by the sellers of rutabagas?

6.

Suppose the market demand for rutabagas is Q_D = 10 - 0.25P and the Q_S = 0.15P, where P is the price per box of rutabagas and Q measures the quantity of boxes. Suppose the government assesses a rutabaga tax of $5 per box on the sellers of rutabagas. What is the relative burden of this rutabaga tax between buyers and sellers?

7.

Suppose the market demand for rutabagas is Q_D = 10 - 0.25P and the Q_S = 0.15P, where P is the price per box of rutabagas and Q measures the quantity of boxes. Suppose the government assesses a rutabaga tax of $5 per box on the buyers (rather than the sellers) of rutabagas. which of your previous answers would change? Mark any (between 0 and 4) correct answers.

Question 1 [40 pts] – Free Rider Problem –Game Theoretic Modeling

Consider two individuals who are deciding to pay for a public good or not. The value of the public good is 10 for each individual and the cost of the public good is 12 TL.

• If they both vote yes and agree to pay, they will share the cost equally and the public good is provided.
• If only one vote yes and agrees to pay, full cost will be borne by this individual and the public good will be provided.
• If they both opt out from paying by voting no, no funds will be collected and the public good will not be provided.

Given the valuation for the public good, cost and the cost sharing mechanism above and our knowledge about public goods this decision process is depicted as a simultaneous form game below.  [Note on notation: the first payoff in each cell corresponds to the payoff of the row player, Individual 1. The second payoff in each cell corresponds to the payoff of the column player, Individual 2.]

Modeling: – Using Game Theory

1. (5 pts) Public goods are non-rival and non-excludable. Check the payoffs (net benefit; benefit after costs) from each outcome and note that while writing the payoffs of the game these two characteristics of pure public goods is used. Refer to these characteristics first and explain how these characteristics are incorporated into the game.

2. (4 pts) Explain why this problem about the provision of a public good can be represented using game theory; say as opposed to the problem of an individual deciding to buy a t-shirt for himself or not.

One-Shot Game: Impossibility of reaching the cooperative outcome.

3. (2 pts) What is Individual 1’s best response to other player choosing to pay for the public good? Briefly explain.
4. (2 pts) Explain what a dominant action is and then indicate if there is a dominant action here for any player.

5. (2 pts) Solve for the Nash equilibrium of the game. Explain your work.

6. (5 pts) Evaluate the Nash equilibrium of the game. Is this equilibrium socially efficient? Explain by referring to the market failure we encounter with the public goods.

7. (5 pts) Can the two individuals just promise each other to vote yes and then sustain the promised cooperative outcome in this game that is played once? Show that each individual has an incentive to cheat and vote no instead when the other is sticking to its promise.

a) Explain what is meant by exchange rate overshooting/undershooting.

b) There are two (2) ways that authorities may try to finance increased government expenditure (G):

i. By printing extra money and using the money directly to finance its expenditure

ii. By borrowing — that is by selling bonds to economic agents

c) In the Dornbusch model the uncovered interest rate parity (UIP) condition is assumed to be hold continuously, that is, if the domestic interest rate is lower than the foreign interest rate then there need to be an equivalent expected rate of appreciation of the domestic currency to compensate for the lower domestic interest rate." Explain this statement.

explain the WTO principle rules

Pertain to entities receiving federal funds?

Explain the different types of trade restrictions and how they affect consumer and producer surplus overall.

Explain protectionism in your own words.

What are the three main forms and briefly explain each.

List some pros and cons of protectionism (0.5 points) explain each one with your own words.

1. Using game theory, illustrate why it is difficult to finance public goods. Discuss the players, the strategies, and the payoff matrix. How might one solve the problem of financing public goods? Provide examples.

Question 1 1 pts

According to the National Bureau of Economic Research, the US slipped into a recession earlier this year.

Group of answer choices

True

False

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Question 2 1 pts

Throughout history money

Group of answer choices

None are correct

has always been "backed" by a commodity

has always been paper currency or precious metals

has always been farm animals

has been virtually anything that is accepted as a means of payment for stuff

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Question 3 1 pts

The US dollar derives its value

Group of answer choices

due to its acceptability

all are correct

because the government says it's "legal tender" and due to its acceptability

from the amount of gold the government owns

because the government says it's "legal tender"

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Question 4 1 pts

The term dollar is derived from the German word

Group of answer choices

thal; which in German means, valley

puppe; which in German means, doll

geld; which in German means, money

zill; which, in German means, horse's rear-end

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Question 5 1 pts

A $120 price tag on a pair of sneakers is an example of money functioning as a

Group of answer choices

means of deferred payment

medium of exchange

store of value (or wealth)

unit of account

A commercial bank can increase its (total) loans by an amount equal to its

Group of answer choices

holdings of government securities. (ie .e., the value of)

required reserves

excess reserves

checkable deposits

18

If the reserve ratio is 20%, the value of the money multiplier would be

Group of answer choices

10

5

20

0.5

19

Assuming that the banking system is “all loaned up”. Based on your above answer, given an increase in checkable deposits of $10 billion, how much money could the banking system potentially create?

Group of answer choices

$0—only the Fed can create money (by “printing it”)

$20 billion

12.5 billion

$50 billion

$40 billion

20

What assumption(s) must be made when you derived your answer for question 19?

Group of answer choices

banks must be willing to loan out all their excess reserves

interest rates must be at fairly low levels

the economy must be at or near full employment

the demand for money must be constant

none are correct — only the Fed can create money

21

As part of the Federal Reserve System, how many “regional” federal reserve banks are there?

Group of answer choices

1

12

50

24

22

To say that Federal Reserve Banks are "quasi-public" institutions means that

Group of answer choices

they are privately owned, but publicly controlled

they deal only with commercial banks, not the public

they deal only with the public, not commercial banks

they are publicly owned, but privately managed

Question 11

The asset demand (D_a) for money

Group of answer choices

includes coins, paper currency and government bonds

is typically high if interest rates are relatively high

is the demand for money as a medium of exchange

is the demand for money in case of an emergency

is the demand of money as a store of wealth

Question 12

The asset demand for money

Group of answer choices

is unrelated to both the rate of interest and real income

varies inversely with nominal income

varies inversely with the rate of interest

varies inversely with real income

Question 13

If the quantity of money demanded exceeds the quantity supplied

Group of answer choices

the money demand curve will shift to the right

the interest rate will rise

the money supply curve will shift to the left

the interest rate will fall

Question 14

“Bond markets hate good news" because if as a result, inflation becomes a major concern (note: the list below is in the imprecise language of most of the media) (HINT: Bond Prices = 1/R)

Group of answer choices

the Fed might raise "interest rates" which will lower bond prices

the Fed might lower “interest rates" which will raise bond prices

none are correct; bond markets actually like good news, because robust economic growth results in an increase in the demand for bonds, driving up bond prices

the Fed might lower "interest rates" which will lower bond prices

the Fed might raise "interest rates" which will raise bond prices

Question 15

An increase in the money supply is likely to decrease

Group of answer choices

prices

money demand

interest rates

nominal income

Question 16

Commercial banks create money by

Group of answer choices

making loans

buying government securities

selling government securities

charging interest

getting bailed-out by the federal government

Question 6 1 pts

Money eliminates the need for the double coincidence of wants through its use as a

Group of answer choices

unit of account

store of value

medium of exchange

standard of value

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Question 7 1 pts

In the United States, the basic money supply (M1) is primarily comprised of

Group of answer choices

coins, "paper" currency, checkable deposits, & short-term government debt

coins, "paper" currency & checkable deposits

a commodity

worthless pieces of "paper", thanks to the Federal Reserve System

"near-monies"

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Question 8 1 pts

Keynes' important contribution to the concept of money demand was (hint: see question #10)

Group of answer choices

he really didn't make any important contribution

the development of the various definitions of money (M1, M2, etc.)

an emphasis on the possibility that the public might wish to hold money as a "store of wealth" or an asset

the "transactions demand" for money

that there is an inverse relationship between the value of money and the price level

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Question 9 1 pts

The demand for money function put together in class is formally known as

Group of answer choices

the classical demand for real cash balances

what demand for money function?

the liquidity preference demand for money function

the alcohol preference for money function

the transactions demand for money function

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Question 10 1 pts

The transactions demand (D_t) for money is most closely related to money functioning as a

Group of answer choices

store of value (or wealth)

unit of account

medium of exchange

measure of value

12. If demand is elastic

A. A two percent increase in price will result in less than a two percent decrease in the quantity demanded

B. A two percent increase in price will result in a two percent decrease in the quantity demanded

C. A two percent increase in price will result in more than a two percent increase in the quantity demanded

D. A two percent increase in price will result in less than a two percent increase in the quantity demanded

E. None of the above is correct