Briefly describe the concept of "moral hazard" as it relates to corporations in the presence of government bailouts.
Who realizes the benefits and who bears the cost of moral hazard?
How can the costs of moral hazard be reduced through effective corporate governance?
In: Economics
Discuss in detail the transition of a firm from perfect competition to monopolistic. Explain with a good example.
In: Economics
We are looking at the market for gasoline in the United States, this week. Begin with the market in equilibrium. A report is released that we should expect the price of gasoline to rise in the near future, with up to a 50-cent increase sometime next week. Assume that we all have access to this information. Graph the changes and answer the following questions:
How do the unhappy participants react?
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In: Economics
80% of the world trade is dominated by the developed countries. In this context, poor nations / less developing countries should be allowed to protect their industries from foreign competition / imports.
In the light of Comparative Advantage, discuss whether it is better for a country specifically for poor nations to engage in free trade or to use some form of protection from foreign competition.
In: Economics
Gloria and Tran are both having bad weeks.
Gloria forgot to save her work and had to redo her essay, a pain that she values at about $30, and also the professor told her the essay was bad, a pain she values at $60.
Tran skinned his knee while walking his dog, a pain he values at about $30, and also his sister got a fever and he had to care for her, a pain he values at $60.
Assume both of them have the same prospect theory value function. Keeping mental accounting in mind, which of them is likely feeling worse right now?
Select one:
a. Tran
b. They're equal
c. Gloria
d. No way to tell
Draw a graph to support your answer
In: Economics
Due to the sudden outbreak of the pandemic, you were asked to stay back in your home to maintain social distancing. If you do not follow the restriction, there is a possibility that you infect another 2.5 people, and on average, the government must incur $40 each person on their medical expenses. You realize that your marginal cost of staying back home is MC= 10 + 5 Q, where Q is the number of weeks you confine yourself in your home. Moreover, you enjoy a benefit of $40 each week for not traveling to your work. How many days will you stay back home at optimum (consider yourself a selfish person)? What is the socially efficient number of weeks you should stay back home? What fine should the government impose if you do not follow the rule?
In: Economics
What are your thoughts and feelings about the George Floyd incident?
Did this incident change your feelings about the police and/or racism in our country? If so please describe how it has changed your opinion about police and/or racism in the US. Write an essay about your feelings about the incident.
In: Economics
A) Using the IS-LM model, show graphically and explain the effects of a monetary contraction. What is the effect on the equilibrium interest rate and level of output?
B) Using the IS-LM model, show graphically and explain the effects of a monetary expansion. What is the effect on the equilibrium interest rate and level of output?
In: Economics
Why many people tend to hold more money, while some other people
prefer to
hold less money. And why the interest rate serves as the
opportunity cost of
holding money?
In: Economics
Give two reasons why the Bank of Canada's (BoC) policy of buying Government bonds may be beneficial. Be specific about what is at stake and how this monetary policy may be beneficial. Provide two reasons why this monetary policy may be risky. What is at stake?
In: Economics
What are the benefits of Business Intelligence by Amazon and, the challenges they faced in implementing and using BI?
In: Economics
Two firms compete in a market to sell a homogeneous product with inverse demand function P = 400 – 2Q. Each firm produces at a constant marginal cost of $50 and has no fixed costs -- both firms have a cost function C(Q) = 50Q.
If the market is defined as a Bertrand Oligopoly, what is the market price?
Refer to the information above.
What is the total amount of Q produced in this market?
How much does firm 1 produce? (Round to one decimal place)
In: Economics
In: Economics
1. Depict Two currency markets graphs: the Japanese Yen and the U.S. Dollar, setting up the two markets in initial equilibrium. Next to the supply curve and the demand curve state who is on the supply curve in each market and who is on the demand curve in each market.
2. Assume there is an increased preference among U.S. consumers for Japanese electronic goods because of a perceived superior quality. Copy number 1 graphs and reflecting this change. MAKE THEM SEPARATE FROM NUMBER 1.
In: Economics
Consider a monopolistic market with the following inverse demand curve: P=z(32-Q) where z is the quality level. Suppose that the marginal production cost of output is independent of quality and equal to 0. The cost of quality is C(z)=8z2.
a) (6 pts.) Calculate the production level that would maximize profits.
b) (7 pts.) Calculate the quality level that would maximize profits.
In: Economics