Consider a market with demand given by Q = 10p^−2 . A firm has a constant MC = 2 with no other fixed costs. Use the Lerner Index rule to answer the following questions.

1. (10 points) Suppose the government grants this firm an exclusive monopoly in this market. Find the price-cost margin and the profit-maximizing price.

2. (10 points) Suppose that, in addition to the firm's output, the government always produces output QG = 2p^ −2 where p is the price charged by the firm. Show that the market price and the quantity do not change.

Over the past few decades, Boeing’s chief competitor was Airbus. Recently, smaller firms have entered the market. One of these firms is Embraer. Embraer recently had one of the best-selling business jets, the Phenom 300. Though, there are competitors, Boeing has led the market in terms of pricing.

1. What type of market structure is this and what model might we use to analyze it?

These companies have the following total cost functions with A = Airbus, E = Embraer and B = Boeing:

TC_A= $1,500,000 + $30,000,000Q_A + $500,000Q_A²

TC_E= $484,000,000 + $10,000,000Q_E + $250,000Q_E²

TC_B= $3,000,000,000 + $2,000,000Q_B + $55,000Q_B²

The industry demand curve for this type of jet aircraft is:

Q = 950 - 0.000015P

2. What are the supply functions for Airbus and Embraer? (Hint: these firms operate as price takers)

3. What is Boeing’s demand function? (Hint: Boeing’s demand function is the industry demand curve minus the following firms’ supply or Q_B= Q – Q_A– Q_E. Use the answers you found in question 2)

4. What is Boeing’s profit-maximizing price and output.

5. What are Airbus’ and Embraer’s profit-maximizing output levels?

6. Is the industry in short-run equilibrium, i.e. does firm supply equal total demand?

7. Which firms are earning an economic profit? Which ones are earning a normal rate of return? How do you know?

8. Is the industry in a long-run equilibrium? Why or why not?

Donald J. Trump’s speechwriters once told him to say something like “my tax cut plan would lead to a larger share of national outcome being used for investment, helping to permanently restore rapid economic growth (per capita).”

Do you agree it would increase the growth rate of GDP help during his presidency? What about raising growth permanently?

Suppose that a perfectly competitive firm is currently producing 100 units of output. If the short-run marginal cost of producing the 100^th unit is greater than the price at which that unit can be sold, how must this firm alter its labor input in order to maximize profit

describe

1. explain how to find the stationary state in a Solow model

2. Explain how the economy behaves out of the stationary state in a Solow model.

Below is a case on estimation and analysis of demand for home delivery pizza.

Read the case carefully and use the appropriate techniques given in the text book on demand estimation and analysis and make your decisions, judgments and evaluation based on the results.

Consider Al Barkat Pizza, one of the home delivery pizza firms serving the Muweileh, Sharjah. The manager and owner of Barkat Pizza, Mariam, knows that her customers are rather price-conscious. She knows that Pizza buyers in Muwilah pay close attention to the price she charges for a home-delivered pizza and the price her competitors charge.

Mariam decides to estimate the empirical demand function for her firm’s pizza. She collects data on the last 24 months of pizza sales from her own company records. She knows the price she charged for her pizza during that time period, and she also has kept a record of the prices charged at Al’s Pizza Oven. She is able to obtain average household income figures from the Small Business Development Center. The only other competitor in the neighborhood is the local branch of McDonald’s. Mariam is able to find the price of a Big Mac for the last 24 months from advertisements in old newspapers. The data she collected are presented in table 1.

Table 1: Data for Checkers Pizza

A. Using the data in Table 1, specify a linear functional form for the demand for home delivery pizza, and run a regression to estimate the demand for pizza.

B. Using Excel Data Analysis, estimate the parameters of the empirical demand function specified in part a. Write your estimated demand equation.

C. Evaluate your regression results by examining signs of parameters, p-values (or t-ratios), and the R².

Some believe that the Debt Crisis of the 1980s was the result of exploitation of developing countries by advanced countries. Those who argue this proposed that all developing country debts should be canceled. identify at least one country that suffered as a result of the Debt Crisis and explain whether Debt Reduction strategies were justified or Do you think that debt reduction contributes to moral hazard? In answering this question, you must define Moral Hazard.

For these next five problems, use the above Table B. Look at the Mapleton book Problem Set H for great practice in doing this type of problem! You may want to print a copy of the table to fill out. L is the number of workers, and output is measured in sandwiches. Assume a fixed amount of capital. Assume labor is the only variable cost.

1. Fill out the APL column. The APL when 3 workers are hired is _____ sandwiches.

2. Fill out the marginal product of labor (MPL) column. The MPL of the 4th worker is ______ sandwiches.

3. In Table B, diminishing MPL begins with which worker? In other words, which is the first worker who adds less output at the margin than the previous worker?

A. first worker

B. second worker

C. third worker

D. fourth worker

E. fifth worker

F. sixth worker

G. seventh worker

H. eighth worker

I. we do not see diminishing MPL in the table yet.

4. In Table B, assume all workers get paid the same wage rate of w = $40. Assume that TFC = 10. Which of the following is true?  Hint: You can use this wage rate information to fill in the cost columns (MC, TC, TVC, AVC). The costs are found using the costs associated with hiring more workers. Remember also that MC = w/MPL.

A. The marginal cost of sandwiches made by the 6th worker is $10

B. The sandwich with the lowest marginal cost was made by worker #4

C. The marginal cost of sandwiches increases when L increases from 3 to 4

D. The marginal cost of sandwiches decreases when L increases from 6 to 7

5. In Table B, assume all workers get paid the same wage rate of w = $40. Assume that TFC = 10. Consider the average variable cost (AVC). Which of the following is true?

A. The AVC of sandwiches increases when L increases from 2 to 3

B. The AVC of sandwiches is minimized when L = 4

C. The AVC of sandwiches is $8 when 6 workers are employed

D. The AVC of sandwiches is $8 when 5 workers are employed

1. The first bitcoin transaction was conducted on January 12th 2009. In its early days, the value of bitcoins were practically zero (In March 2010, a user auctioned 10,000 bitcoins for a total of $50 but no buyer was found.) By December 17th, 2017, the price of bitcoin has reached an all-time high of $19,783. As of today (March 12, 2019), its price is $3,858.

a. In what ways is bitcoin similar to a Ponzi scheme?

b. In what ways is bitcoin different?

As mentioned at the beginning of the Chapter 2 (Santerre and Neun), the life expectancy rate in Russia fell significantly from 1989 through 1994. Use health production theory to explain what would happen to the relationship between good health and medical care in Russia if alcohol consumption diminished and the market economy strengthened. Provide a graph to illustrate your explanation.

Show using a graph that if a monopolist in an input market faces a monopsonist in the same input market, the equilibrium level of input use is indeterminate.

Why is it okay to speculate on Currency?

Describe a time when someone did not really listen to or understand a point you were trying to get across. Describe the actions you took to try to make them understand your point. How do these actions apply to negotiations and sales?

1.) Think back to August 6, 1945. The United States has just dropped an atomic weapon on the city of Hiroshima killing tens of thousands of Japanese and devastating the infrastructure. A Keynesian at that time might conclude that there is a silver lining in the destruction, as economic prosperity will result. Evaluate this claim in a few sentences.

2.) Do people need money in order for market prices to form? Explain.

3.)  Most introductory economics textbooks have a section on “market failure.” It is here that students learn that markets may fail to achieve their potential – leaving people worse off than they theoretically could be. The existent of market failure is often taken as an excuse for government intervention to do whatever markets fail to do. In just a couple of sentences, explain why economists (and others, particularly politicians) must accept the possibility of “government failure” as well? That is, tell me why government solutions to perceived market “failures” may themselves fail to achieve their own stated goals? The U.S. Drug war is an apt example of a discrepancy between a stated political policy goal and the actual attainment of that goal.