A car rental company usually requires customers to buy insurance to cover their rented cars against damage and the insurance premium is much higher than the normal car insurance for similar coverage. Discuss why this is the case using the context of asymmetric information

Mr. Wong buys gold from gold mines and resells it in the retail market in Country A. Before the gold is sold in the retail market, Mr. Wong needs to store the gold in a warehouse and the storage cost is $10 per kg of gold per day. For examples, if Mr. Wong buys 1kg of gold on 22 April 2020 and sells it on the same day, Mr. Wong has to pay a storage cost of $10. If Mr. Wong buys 1kg of gold on 22 April 2020 and sells it on the next day, Mr. Wong has to pay a storage cost of $10 x 2 = $20. There is no fixed cost in Mr. Wong’s gold business.

Mr. Wong is the sole retailer of gold in Country A and he would like to maximize the profit of his business.

The market demand for gold is Q^d = 3000-75P and

The corresponding marginal revenue is MR = 40 – 2Q/75,

where Q^d is the quantity demanded for gold (kg/day) and P is the price of gold per kg.

For instance, when P = 20, Q^d = 3000-75(20) = 1500 and MR = 40-2(1500)/75 = 0.

(i) Suppose that Mr. Wong buys gold at a price of $10 per kg. What should be the price of gold set by Mr. Wong in the retail market and what is the quantity of gold sold in the retail market? What is the profit of Mr. Wong’s business?      

(ii) Suppose that the government of Country A requires Mr. Wong to pay for a licensing fee for operating his gold business. After paying for a licensing fee of $2,000 per day, Mr. Wong can sell whatever amount of gold in the retail market in Country A. Briefly discuss how this licensing fee may affect your answers in (i).

(iii) Now, Mr. Wong does not need to pay any licensing fee. Yet, because of a logistical problem, gold purchased today can only be sold on the next day. Briefly discuss how this logistical problem will affect your answers in (i).   

(iv) Now, Mr. Wong does not need to pay any license fee and there is no logistical problem. On 22 April 2020, after Mr. Wong purchased 750kg of gold at a price of $10/kg, the government of Country A announced that the people of Country A cannot buy gold anymore. On the same day, a foreign businessman contacted Mr. Wong suggesting to buy 750kg of gold from him at a price of -$5 (minus $5 per kg). This is the only offer to Mr. Wong on that day. If you were Mr. Wong, will you accept this offer and sell your gold at a negative price?  

(v) “A futures contract for U.S. crude (oil) prices dropped more than 100% and turned negative for the first time in history on Monday, showing just how much demand has collapsed due to the coronavirus pandemic (CNBC April 19, 2020)”. With reference to your answer in (iv), briefly explain why crude oil price could be negative.

Do you agree that alert individuals who purchase valuable domain names should be able to sell them to the highest bidder? If so, in all circumstances or only in certain circumstances?

In 2003, Johnson & Johnson (J&J) introduced the first drug-eluting stent (DES), a medical device inserted into blocked arteries (in a process called coronary angioplasty) to restore blood flow. The drug-eluting stent made previous stents and other methods of restoring blood flow obsolete, as it solved the problem of secondary blood clots and blockages that plagued previous methods. Suppose the demand for DESs is Q = 9 – (P/2) where Q is the number of DESs demanded per year (in thousands) and P is the price of a DES in thousands of dollars.

(a) Suppose it cost J&J $6 thousand to produce each DES. If J&J were the only producer of DESs (e.g., because entry is prevented by J&J’s patents), what price should J&J charge for its DES to maximize profit? How many DESs would be sold at that price? (Make sure your answers are in the correct units.)

(b) In 2004, Boston Scientific figured out a way to engineer around J&J’s DES patents and introduced its own DES. However, Boston Scientific’s technology was more costly than J&J’s. It cost Boston Scientific $10 thousand to produce each DES. If physicians and patients consider the DESs of J&J and Boston Scientific identical and J&J and Boston Scientific compete by simultaneously choosing how much to produce (where the combined DES production determines the price), how many DESs will J&J produce in equilibrium? How many DESs will Boston Scientific produce? What is the equilibrium price in this case? (Again, make sure your answers are in the correct units.)

Macroeconomics:

Explain the modern DSGE approach to studying economic fluctuations.

Describe the political economy of the socialist countries after independence, and then in the socialist era. Explain for each period who were the ruling elites and their economic strategies.

2) Let us say that the protectionism of the coal industry is in the form of a tariff. Talk on the benefits and costs of a tariff. Do the benefits exceed the costs or vise versa? Ascertain you include the terms of trade. Also, what is an optimal tariff?

The authors claim that national data are unlikely to provide evidence for or against a Phillips Curve. Carefully explain why this is (in your own words, of course).

Effect of lower interest rate on economy

5. Fiscal policy, the money market, and aggregate demand Consider a hypothetical economy in which households spend $0.50 of each additional dollar they earn and save the remaining $0.50. The following graph shows the economy's initial aggregate demand curve ( AD1 ). Suppose the government increases its purchases by $2.5 billion. Use the green line (triangle symbol) on the following graph to show the aggregate demand curve ( AD2 ) after the multiplier effect takes place. Hint: Be sure the new aggregate demand curve ( AD2 ) is parallel to AD1 . You can see the slope of AD1 by selecting it on the following graph. AD 2 AD 3 100 102 104 106 108 110 112 114 116 116 114 112 110 108 106 104 102 100 PRICE LEVEL OUTPUT (Billions of dollars) AD 1 The following graph shows the money market in equilibrium at an interest rate of 3% and a quantity of money equal to $15 billion. Show the impact of the increase in government purchases on the interest rate by shifting one or both of the curves on the following graph. Money Demand Money Supply 0 5 10 15 20 25 30 6 5 4 3 2 1 0 INTEREST RATE MONEY (Billions of dollars) Money Demand Money Supply Suppose that for each one-percentage-point increase in the interest rate, the level of investment spending declines by $0.5 billion. The change in the interest rate (according to the change you made to the money market in the previous scenario) therefore causes the level of investment spending to by . After the multiplier effect is accounted for, the change in investment spending will cause the quantity of output demanded to by at each price level. The impact of an increase in government purchases on the interest rate and the level of investment spending is known as the effect. Use the purple line (diamond symbol) on the graph at the beginning of this problem to show the aggregate demand curve ( AD3 ) after accounting for the impact of the increase in government purchases on the interest rate and the level of investment spending. Hint: Be sure your final aggregate demand curve ( AD3 ) is parallel to AD1 and AD2 . You can see the slopes of AD1 and AD2 by selecting them on the graph.

How would each of the following affect the AD, the short run AS and the long run AS curves? Make sure to state why AD, short run AS and long run AS is effected or why it is not

1. An increase in money supply.
2. A slow down in China’s economic growth due to the sub-prime crisis in the US.
3. An increase in private and public capital investment.
4. A cut in income tax.

Draw the demand curve for an environmental service, for example carbon sequestration (process of capture and long-term storage of atmospheric carbon-dioxide) from tree planting and discuss what its slope means as a measure of willingness to pay for the service (explain the direction of slope). Label the axes on your graphs clearly. Draw the supply curve for the service and discuss its slope and how it measures the marginal costs of providing increasing levels of the service (explain the direction of slope). Identify the price, P*, and quantity, Q*, that would satisfy the static efficiency/equilibrium condition. Label the area of net benefit to society, i.e., consumer surplus (CS) and producer surplus (PS)

A local tire dealer wants to predict the number of tires sold each month. He believes that the number of tires sold is a linear function of the amount of money invested in advertising. He randomly selects 6 months of data consisting of tire sales (in thousands of tires) and advertising expenditures (in thousands of dollars). Based on the data set with 6 observations, the simple linear regression model yielded the following results. ?X =24 ?X2=124 ?Y = 42 ?Y2 =338 ?XY =196 Calculate the coefficient of determination and the coefficient of correlation between X and Y. Interpret the coefficient of Determination. also find the slope and intercept and write the estimated Regression equation. What would the predicted sales of tires be if he spends five thousand dollars in advertising?

Computer typing only please.

One of the most fundamental types of market structure – perfect competition. Consider the following industries and discuss which industries could suit best into the category of perfect competition. When you evaluate each industry, assess whether each industry fits into the category of perfect competition, by satisfying four underlying characteristics of perfect competition in the textbook with supporting details.

• Barley industry
• Clothing industry
• Cellphone industry
• Heathcare industry

1. Using the steps in Benchmarking (see below), perform an internal and competitive benchmarking of section/department and Company.

The 10 Steps of Benchmarking

1. Determine processes to be benchmarked.

2. Determine organizations to be benchmarked.

3. Gather data.

4. Locate deficiencies.

5. Determine future trends.

6. Reveal results and sell the process.

7. Achieve consensus on revised goals.

8. Establish procedures.

9. Implement procedures and monitor results.

10. Recalibrate benchmarks.