You own goods A and B. You are considering increasing price of good A by 10%. Here is the information you have Pa = 20 Qa = 1000 For each $1 increase in Pa, Qa will decrease by 100. Pb = 12 Qb = 750 For each $1 increase in Pa, Qb will increase by 100. (The point of this exercise is to have you do everything the long way then use the delta r formula so you can see the difference) a . What is Total revenue of A before the price change? b. What is total revenue of A after the price change? c . What is Total revenue of B before the price change? d. What is total revenue of B after the price change? e. What is the change of revenue for A after the price changes? f. What is the change or revenue for B after the price changes? g. What is change in total revenue for both goods after price changes? h. What is the own price elasticity for good A? i. What is the cross price elasticity of A and B? j. Calculate the change of revenue using the formula provided in class. k. Explain why the two methods have different answers. l. To calculate the change in total revenue from the price change, which method do you prefer? Doing parts a-g or doing part h-j? Briefly explain.

What are some economic implications of climate change and/or environmental protections? How has COVID-19 impacted the implications on the environment?

Describe and explain the powers held by legislature within the system oif checks and balances which checks the powers of the governor and how the governor can check the powers of the legislature?

What explains the origins of wealth in the New World?

This week’s discussion topic is about Gross Domestic Product (GDP), Per Capita GDP and Quality of Life. GDP is the market value of all final goods and services produced in an economy in a year. Per Capita GDP is GDP/Population and shows how much of total GDP is theoretically available to each individual in the society. Per Capita GDP is the normal measure of Standard of Living when comparing nations.

Quality of Life has no standard definition. It is broader concept that attempts to embrace the multitude of variables that make people happy. There are many measures of it, but all include GDP and/or Per Capita GDP.

The ultimate question for this week is: “Is GDP a good measure of national economic well being?”

38. When insiders have a much greater impact on the wage-bargaining process than do outsiders, the negotiated wage is likely to be the equilibrium wage.

    A. about one-quarter of B. much less than
    C. almost equal to
    D. about one-half of

    E. much greater than

39. All of the following do not cause of structural unemployment, except: A. sectoral shift.

    B. efficiency wages.
    C. mismatch of skills
    D. employment-insurance.
    E. workers moving from one job to another

40. Workers unemployed as a result of wage rigidity are:
    A. actively searching for a job to match their skills.
    B. not eligible to receive employment-insurance benefits.
    C. waiting for a job to become available.
    D. relocating to another part of the country as a result of sectoral shifts. E. actively seeking retirement.

41. Employment insurance increases the amount of frictional unemployment by: A. softening the economic hardship of unemployment.
    B. making workers more frantic in their search for new jobs.
    C. inducing workers to accept the first job offer that they receive.

    D. making employers more reluctant to lay off workers.
    E. making retired workers more willing to reenter the labour market.

42. Economists call the changes in the composition of demand among industries and regions: A. insider-outsider conflicts.

    B. sectoral shifts.
    C. moral hazard.
    D. adverse selection. E. efficiency wages.

Incentives

Economics is about how people (or governments, firms, etc) make choices under uncertainty. We assume that people are rational, meaning that when they make decisions, they weigh the costs and benefits of the different choices, and then choose whatever will make them better off. Incentives are a reward or punishment. Combined with our rational actor, incentives give us a framework for trying to influence behavior. If we want people to drive more slowly in a school zone, we can change the costs of speeding or the benefits of driving slowly. Fines and cameras are (negative) incentives to get people to slow down. If we want people to stay at home during a pandemic, we just need to change the incentives. We are seeing this happen in real-time: some localities are arresting or fining people that ignore the stay at home order, raising the cost of leaving the house for an approved reason. Other approaches have tried to encourage people to stay home by increasing the benefit. For example, HBO has made many of their old shows available free online to encourage people to stay home (If you haven't seen them Silicon Valley and Barry are both highly recommended)

Incentives and Vaccines

We desperately need a vaccine if we are ever going to return to anything resembling normal life. So how can we use what we know about incentives to encourage people to develop new ideas like a vaccine? Watch the following video and then write a paragraph (or so) about incentives and vaccines.

Use the money market model to conduct the following analysis. For each of the following events, (i) say which curve shifts, (ii) say in which direction it shifts, and (iii) say in which direction the equilibrium interest rate changes.

a. Stock prices fall significantly.

b. The U.S. price level rises.

c. The Fed engages in an open market sale of bonds.

d. Credit card fraud becomes a major problem and people start making more payments using money.

Based on the simplified model of a choice between a domestic currency deposit in dollars and a foreign currency deposit in Euros, illustrate and explain the derivation of the AA curve of Krugman-Obstfeld-Melitz. What does the AA curve represent?

a) What is the difference between the short-run AS curve and the long-run AS curve? Define each and explain the underlying assumptions. What would cause each to shift either to the right or left? b) What does the concept “sticky wages” refer to? Explain its implications within the AD/AS model.

Please explain the difference between judicial review and parliamentary sovereignty and the trend towards judicial review after the end of the Second World War.

1. A kebap shop and a fancy café are adjoin. Due to the kebap shop cause too much smoke and smell, the café loses costomers.

There are number of costomers and profit assoicated with them are given below. Profit of café decreses as the number of costomers of Kebep shop increases. Depending on these data, can Coase Theorem find a solution for this externalities problem? Why?

Kebap shop                                                   The Café

Number of costomer     Profit                                  Profit                   Total

0                                          0                                          4000                     4000

100                                      3000                                   2500                     5500

200                                      5000                                   1500                     6500

300                                      6000                                   1000                     7000