About 85% of federal spending goes to the following areas, most of which are widely supported by the American public: Social Security and unemployment, Medicare and health, the military, interest on the debt, and veteran’s benefits. Is it possible to balance the budget without making major cuts in these areas? If not, what trade-offs do politicians face when making cuts to popular programs? Who benefits from the cuts and who is hurt?

What is your observation regarding the economy during the current crisis of COVID 19? Is there any instrument of Islamic financial products that you think can help to lessen the economic burden faced by some people during this crisis? Explain.

Imperfect Competition — End of Chapter Problem

Suppose that the inverse market demand for pumpkins is given by ?=$10−0.05?. Pumpkins can be grown by anybody at a constant marginal cost of $1.

a. If there are lots of pumpkin growers in town, so that the pumpkin industry is competitive, what will be the equilibrium price (P), and how many pumpkins (Q) will be sold?

P = $

Q =

b. Suppose that a freak weather event wipes out the pumpkins of all but two producers, Linus and Lucy. Both Linus and Lucy have produced bumper crops and have more than enough pumpkins available to satisfy the demand at even a zero price. If Linus and Lucy collude to generate monopoly profits, how many pumpkins will they sell, and what price will they sell for?

Q =

P = $

c. Suppose that the predominant form of competition in the pumpkin industry is price competition. In other words, suppose that Linus and Lucy are Bertrand competitors. What will be the final price of pumpkins in this market—in other words, what is the Bertrand equilibrium price? At the Bertrand equilibrium price, what will be the final quantity of pumpkins sold by both Linus and Lucy individually and for the industry as a whole?

P = $

Q_Linus =

Q_Lucy =

Q_industry =

d. In this scenario, Linus and Lucy will each earn

zero economic profits.

e. Suppose Linus lets it be known that his pumpkins are the most orange in town, and Lucy lets it be known that hers are the tastiest. The results you found in parts c and d would continue to hold to the extent that customers are

willing to substitute Linus's and Lucy's pumkins for one another.

f. Suppose Linus could grow pumpkins at a marginal cost of $0.95. What would be Linus's price and quantity? (Hint: assume Linus will price his product so as to undercut Lucy by the least amount possible.)

P_Linus = $

Q_Linus =

g. In this scenario, Lucy's output would

fall to zero.

Please explain how to calculate Total Social Welfare (total surplus) with and without the presence of an excise tax, without the use of imagery.

Cryptocurrency, such as Bitcoin and Ethereum, is now a household name built on Blockchain Technology. This technology has potential application in some sectors of our economy such as insurance, healthcare, supply chain, real estate and even in the voting system. Consider the following statement and then argue for or against it.

“Use of Blockchain technology will change our economic system as we know it today.”

As a national manager for Southwest Airlines you have recently undertaken a survey of the number of passengers per flight on the Boston-Phoenix route that you service. The survey was conducted over five successive months. The data collected included the round-trip fare for an economy-class flight, the average annual per capita income of people who fly the Boston-Phoenix route, and the average passengers per flight on both Southwest and American. Assume that all other factors (the price charged by other airlines, the size of planes flown, etc) have remained constant.

Fill in your answers in the allotted spaces. For parts a, b, and c. Remember that the key to calculating an elasticity is to find the pure effect by holding everything else constant (or have no other variable change). This influences which observations you will use in calculating the elasticities.

a. On the Boston-Phoenix route, calculate an estimate of the price elasticity of demand for Southwest economy seats. Show your work and explain.

b. For the same route determine the income elasticity of demand for Southwest economy seats. Show your work and explain

c. Also calculate an estimate of the cross-price elasticity of Southwest flights with respect to American flights on the route. Show your work and explain

d. Based on your price elasticity estimate, would Southwest obtain higher total revenue by lowering its price? Explain

e. Based on your elasticity estimates, are Southwest and American flights substitutes or complements? Explain

f. Are Southwest’s economy seats a normal or inferior good?Explain.

These last two questions go beyond the estimates that you have calculated.

g. If consumers had been given more time to adjust to price changes, would you expect the price elasticity of demand to be more inelastic or more elastic? Explain

h. Consider the price elasticity of demand for the category flights on all airlines between Phoenix and Boston. Would that price elasticity be more elastic or more inelastic than the elasticity for just Southwest flights? Explain

given the kind of trade barriers Huawei is facing, does the company need more global integration or more differentiation in the present situation? what is your reasoning?

1) Identify and explain using evidence from the lesson ONE reason that economists use theories and models.

2) Why is the Circular Flow Model a good model to start with in economics?

1. Unemployment (show all work)

Suppose that country a population of 120 made up of a labour force of 100 and 20 children under the age of 15,

1. What is the participation rate.

Eight members of the labour force are unemployed

2. What is the unemployment rate?

Of the eight unemployed 2 worked in a factory that produced pies this factor has closed down and expected to open up after the pandemic.

3. Describe what type of unemployment this is and why.

One of the eight is a sky instructor and has been laid off for the summer

4. Describe what type of unemployment this is and why.

Make as per Canadian standards. 10 marks. thanks.

One of the unemployed cannot find a job and gives up looking

5. What is the new unemployment rate

Imagine that at the same time GDP improves in the US, the European Central Bank (ECB) undertakes another round of quantitative easing, effectively increasing the foreign money supply. What would happen then to the expected foreign return? And to the current equilibrium exchange rate (E(t))? Please provide a short explanation and a graph.

5. MATCHING

Match the terms on the right to the ones on the left by placing the appropriate CAPITAL letter on the space provided. All the phrases are designed to fit; some may fit more than once. In any case, provide only one answer for each term. Illegible answers will be marked as wrong.

1. _____ easy money policy                                A.       increases competition

2. _____   M2+                                                      B.       imports become cheaper

3. _____ C $ depreciates                                     C.       expansionary fiscal policy

4. _____ reduction in Gov. spending                  D.       reduces competition

5. _____ non-tariff barrier                                  E.       used to reduce inflationary pressures

6. _____ C $ appreciates                                     F.       includes notice deposits of banks

7. _____ free trade                                              G.       tight fiscal policy

8. _____ tax reduction                                         H.       Exports become cheaper

9. _____   M 1                                                       I.       interest rates fall

10. ____ tight money policy                                  J.       currency plus demand deposits in banks

4. Economic Growth

Using 2017 as a base year, calculate;

1) The GDP deflator

2) Nominal Economic growth

3) Real economic growth

4) Give reasons why Real GDP per capita may overstate the well-being of a countries inhabitants?

make as per Canadian standards.

1) Explain the 4 ways the Federal Reserve would increase the money Supply and explain and graph how this would impact interest rates, consumption, investment, AD, GDP, Prices and Unemployment. (Make sure to include both the money and the goods graph).