Chapter 16: Briefly explain the “Consumption Puzzle”. What solutions have been proposed to solve it and to what extent they have been successful? Discuss.

Chapter 17: Briefly explain the “efficient markets hypothesis”. What criticisms have been levelled against it? Discuss.

Chapter 18: Should policy be active or passive? Discuss by considering alternative perspectives

How can China's GDP of development promote policy recommendations? Explain

1, Which of these is NOT a component of the Business Model?

A) The value proposition

B) The target market

C) the competition

2, Wang, Digital, Data General, Prime, and other computer companies were all created in northeastern Massachusetts! They felt that computing was professional and not personal. Computers were to be controlled by operators and not end-users. These minicomputer makers failed to see how the microcomputer would make computing ubiquitous. None of them exist today. We refer to their reason for failure as:

A) Utterly unsound economics

B) A business concept blind spot

C) An inability to compete with larger customers

D) Loss of key leadership when the founders retired.

D) the revenue sources

E) all of the above are components of the business model.

1. Please explain how creation of new needs (artificial needs) in capitalism opposes the real needs of humans and nature. Please also relate constant creation of new needs with coronavirus pandemy.

Consumption = C,   Taxes = T,   Investment Demand = ID, Disposable Income = Y-T, Govt. Purchases of Goods and Services = G Aggregate Expenditure = AE, the MPC is constant, Foreign trade is zero. In case you care, autonomous consumption = $40.

a. How much of a change in taxes would be needed to raise equilibrium aggregate expenditure by $1,200?

b.  For the previous problem, how much of that rise in equilibrium income would be the result of induced consumption?

c.  Investment Demand falls by $50 and taxes are reduced by $100. What is the change in total equilibrium output?

Given the disruption of business by the Covid-19 virus, how might business models change going forward? How have business models adapted? Might some business models become more prevalent or obsolete in the future? Provide examples and justify your answer. (250 words).

Suppose the market is monopoly. The market demand function is Q subscript d equals 60 - 0.5 P, where p is the price. The firm has no fixed cost, and the marginal cost MC = 30. a. Write down the marginal revenue of this firm. b. Calculate the profit-maximizing monopolistic price and quantity. c. Calculate the profit of the firm. d. Calculate consumer surplus. After selling the products to the consumers in question (a)-(b), there are still other consumers in the market willing to buy this product at lower price. This firm is able to do price discrimination in the secondary market. e. Write down the demand function and marginal revenue in the secondary market. f. Calculate the price and quantity in the secondary market. g. Calculate the profit of the firm in the secondary market. h. Calculate consumer surplus in the secondary market. i. Show that the welfare loss is less when the firm is able to do price discrimination. You need to calculate the welfare loss before and after the price discrimination respectively. j. Calculate the price elasticity of demand in the first market and in the secondary market.

Pharmaceutical companies spend billions of dollars every year on the research and development of new drugs. Suppose a pharmaceutical company estimates that if they invest $1 billion on the development of a new drug, they can expect to earn $500 million in accounting profit as a result (their stream of future revenue would be $500 million higher than all of their explicit costs, including the R&D costs).   Just based on this information (that this company can expect to earn $500 million in accounting profit from this drug), does this necessarily indicate that this company should develop this drug? What does the decision of whether to invest in this new drug (or another) depend on? Be specific.

Suppose you own a sandwich shop with fixed costs of $1,000/month and marginal costs of $2.00/sandwich. If the price is $6/sandwich, 500 sandwiches are sold. If the price is $4.50/sandwich, 800 sandwiches are sold.

A)  Use these figures to calculate the price elasticity.

B) Calculate the profits and profit margins (profit/total cost) associated with the price at $6/sandwich and at $4.50/sandwich. Given these calculations, what price should you charge for sandwiches?

What component/components of GDP, if any, would each of the following transactions affect and how is it affected?

Chose One: consumption, investment, government spending, net exports or none

Choose One: increasing, decreasing, or none

1. Your family buys a new refrigerator.
2. Aunt Jane buys a new house.
3. Art sells his 1965 Mustang.
4. California re-paves Highway 101.
5. Toyota expands its factory in Princeton, Indiana.
6. Jim buys recreational marijuana from a dealer in Phoenix.

1. What determines the going market rate for any factor of production (wage, interest, rent, and profit)?
2. How might employment discrimination, labor unions, and immigration) change your answer above?
3. What is meant by monopsony and what effect does it have on the market for any factor of production?
4. What is meant by bilateral monopoly and what effect does it have on the market for any factor of production?

Taxes are generally distortionary. This means they affect the behaviour of consumers and/or producers. If the private market would achieve a Pareto efficient outcome without the tax, then when a distortionary tax is introduced, it moves society away from the Pareto efficient outcome. In other words, it makes society as a whole worse off. The efficiency loss is known as the "excess burden" or "deadweight loss" of the tax.

Give an example of a tax and explain how it distorts consumer and/or producer decisions. Explain why this impact on consumer and/or producer behaviour might be inefficient.

Note: Be specific! Do not give a general example like "the GST makes consumers buy fewer goods" - instead, try to think of a tax on a very specific item (or at least how a general tax like the GST might affect a very specific item.

1.Two countries, NZ and AUS, trade with each other. Some industries in each country exhibit internal economies of scale while other industries exhibit constant returns to scale. We should NOT expect to see
Select one:
a. intra-industry trade between NZ and AUS.
b. inter-industry trade between NZ and AUS.

2.Suppose that we have the following inverse supply and inverse demand functions for jandals in a small country called New Zealand:
p = 20 + 2QS and p = 50 – QD
where QS and QD are measured in 1000’s of pairs of jandals. The world price of jandals equals $36. New Zealand has a tariff equal to $6 per pair of jandals. Which of the following is TRUE?
Select one:
a. The price of jandals in New Zealand is $42 per pair. New Zealand will import 3,000 pairs of jandals.
b. The price of jandals in New Zealand is $40 per pair. New Zealand will neither export nor import.
c. The price of jandals in New Zealand is $36 per pair. New Zealand will import 6,000 pairs of jandals.
d. The price of jandals in New Zealand is $42 per pair. New Zealand will export 3,000 pairs of jandals.
c. perfect competition in the industries that are subject to internal economies of scale.
d. small number of firms in the industries that are subject to internal economies of scale.