Assume two neighbors who live next to a pond. Both neighbors get together to determine how each of them value a large deck overseeing the pond. After some economic analysis, they arrive at the following demand estimates: Qa = 160 − 20Pa , Qb = 60 − 5Pb where Q is the size of the deck to be built and P is the price of inputs and labor.

a) Based on these estimates, determine the market demand (assuming these are the only two households living next to the pond) for this public good, the deck overlooking the pond. Draw three graphs on the top of each other -first graph for A’s demand, a second graph for B’s demand, and the third graph for the market demand.

b) Explain the shape of the demand curve. Determine the willingness to pay when the size of the pond is 60 square feet.

c) If the market supply for pond decks were P= 6 + 0.15Q, what would be the optimal provision of this public good, that is what would the size of the pond?

d) Which neighbor is more likely to build the pond? Explain your answer.

New Cities
A regional economy has 11 million workers and an urban utility curve u(n)=15+12n-n^2, where n is the number if workers in millions. Initially, all 11 million workers are in a single city.

a) Suppose the regional government establishes a new city with 1 million workers, leaving 10 million workers in the old City. Predict the new equilibrium distribution of population between the two cities. Illustrate.
b) Suppose the regional government provides a subsidy to the residents of the new city. The subsidy (in utils) is s=12-2n, that is, 10 utils in a city with 1 million workers, 8 utils for 2 million workers, and so on. Predict the new equilibrium distribution of population between the two cities. Illustrate.

A society has 2 goods, A and B, for two people, Larry and Javier. The price of A and B are PA = $4 and PB = $10. Larry’s utility function is UL(A, B) = 40X0.25B0.5 and income is YL = $600. Javier’s utility function is UJ(A, B) = A0.5B0.5 and income is YJ = $2,400. Marginal utilities for Larry and Xavier are:

Larry: MUA = 10A-0.75B0.5 and MUB = 20A0.25B-0.5

Xavier: MUA = 0.5A-0.5B0.50 and MUB = 0.5A0.5B-0.5

1. Find the utility maximizing consumption choices of A and B for Larry and Javier.  Explain your work.
2. Currently in this economy, there are 300 units of good A supplied and 200 units of good B supplied.  Given the consumption demands for A and B above, is this economy in a competitive equilibrium?  If so, explain why.  If not, explain how prices and outputs will adjust to move toward an equilibrium.
3. Draw the situation described in parts a and b in an Edgeworth Box.

what were the root causes to either market failure or government failure or both for India 1991-1997

Project 2

This project has three components:

Analyse Canada’s nominal and real GDP for last 5 years with the help of a table/bar chart/Graph.

Prepare a one-page analysis on the indicators reflecting economy’s well being.

Does the following statement give you a true picture of the situation: “Real GDP in the United States is higher than real GDP in Canada. Therefore, the standard of living in the United States must be higher than that in Canada.” Why? Why not?

How can you predict industry changes using supply and demand? Elaborate. What are the sources of Economic Profit? Looking for some original content.

A columnist for Forbes argues, "Even if China is always better than Spain at producing textiles, if the best thing that Spain could be doing is textiles, then that's what Spain should be doing".

a. What does the columnist mean by "China is always better than Spain" in the production of textiles (which include clothing, sheets, and similar products)? Was the columnist arguing that China has an absolute advantage over Spain in producing textiles, a comparative advantage, or both? Briefly explain with full sentences.

b. The columnist noted that, in fact, Spain exports significant quantities of textiles. If this description of the situation in China and Spain is accurate, briefly explain how Spanish firms are able to export textiles in competition with Chinese firms.

please explain thank you

Offer an example of a strategic commitment you know of or that you believe would be beneficial to a firm in an industry. Explain why the commitment is irreversible, understandable and credible and give an indication of the position (tough or soft) it forces the firm into. Your discussion should make it clear why this move would be beneficial to the firm. Alternatively, your example may be of a strategic move that backfired. In this case, you should similarly describe the actions that constituted the commitment and explain why the commitment failed.

Explain why working and labor conditions are an ethical issue that is currently influencing the international community and what stakeholders are being influenced by this issue and how.

On 26 February, Hong Kong’s Financial Secretary Paul Chan announced that all permanent residents in Hong Kong will receive a HK$10,000 from the HKSAR government. This policy will cost the HKSAR government roughly HK$71 billion and it is aimed at tackling the worse economic downturn that the city has experienced in the last 10 years.

a. Briefly explain why this policy can increase equilibrium output in the short run.

b. An economist argues that if the HKSAR government spends HK$71 billion on goods and services instead of giving each Hong Kong resident a HK$10,000, the policy effect on output would be larger. Briefly discuss the economic rationale behind this economist’s argument.                                              

In perfectly competitive market, we sum horizontally individual firms’ marginal cost curves and use it as an approximation of the market supply curve. Give justifications for this method.

Why does the aggregate supply have 3 regions? What type of economy would you see if equilibrium occurred in each of these given regions (is it a healthy economy? If not what are some of the problems)?