Kip’s Auto Detailing has locations in two distant neighborhoods, Uptown and Downtown. Uptown customers’ demand is given by QUT=1,000−10PQUT=1,000−10P, where Q is the number of cars detailed per month; Downtown customers’ demand is QDT=1,600−20PQDT=1,600−20P. The marginal and average cost of detailing a car is constant at $20.

a. Determine the price that maximizes Kip’s profit if he prices uniformly in both markets. How many customers will he serve at each location? What are his total profits?

P = $

Q_UT =

customers

Q_DT =

customers

Profit = $

b. Suppose Kip decides to charge different prices at each location. What price should he establish in each location? What are his total profits?

P_UT = $

P_DT = $

Profit = $

c. How big are the gains to Kip’s differential pricing scheme?

$333.66

$999.33

$666.66

$500.33

View "Consumer Purchasing Decisions" and "Technology and Consumer Behavior." Based on your review of this chapter, you know that consumers demonstrate specific behaviors as they work toward purchasing a specific product. In addition, the text points out that consumers can arrive at a specific buying decision based on previous experiences with a specific product, a newfound awareness of the usefulness of a particular new product, positive reviews form customers who have previously purchased the same product, etc. Based on your understanding of the consumer buying process, compare and contrast how the consumer buying process and the organizational buying processes differ. Illustrate your ideas with specific real-world examples. In replies to peers, discuss whether you agree or disagree with the way your peers have differentiated between the two buying processes.

Question 1: [55 marks]

When we derived money demand function in class, we assumed that money demand

depends on income and interest rate. Consider an economy that its money demand does not

depend on income and is only a function of interest rate.

M

d

=

L

(

i

)

Suppose that the economy is an open economy that is on a áexible exchange rate system.

1. Draw the money demand and supply curves with money demand and supply on x-axis

and interest rate on y-axis. [3 marks]

2. Show what happens to money demand and supply curves if income changes. [2 marks]

3. Derive the

LM

curve. [5 marks]

4. Derive the

AD

curve. [5 marks]

5. In response to the COVID-19 crisis, suppose that the government of the

ABOVE

ECONOMY

increases transfer payments to help people struggling during the COVID-

19 pandemic.

(a) Show the short run e§ects of this policy using the

Five-Figures Diagram

we drew in class; goods market, money market, the

IS

-

LM

curves, the interest

parity condition curve, and the

AS

-

AD

curves. Explain your answer. [8 marks]

(b) How about the e§ects of this policy in the medium run? Assume that before

and after the changes, the economy is still in a recession (i.e. its output is below

its natural level). To answer this question, draw the

Two-Figures Diagram;

the

IS

-

LM

curves and the

AS

-

AD

curves. Explain your answer. [5 marks]

(c) Do you think this policy is su¢ cient to compensate for damage done to the

economyís production and consumption of goods and services during the epi-

demic? Explain your answer. [2 marks]

6. In response to the COVID-19 crisis, suppose that the foreign government increases

investment in new hospitals. Show the short run e§ects of this foreign policy on the

ABOVE ECONOMY

using the

Five-Figures Diagram

we drew in class; goods

market, money market, the

IS

-

LM

curves, the interest parity condition curve, and the

AS

-

AD

curves. Explain your answer. [10 marks]

7. Suppose that the central bank of the

ABOVE ECONOMY

lowers its target for the

overnight rate and buys government bonds to provide support to the economy during

the COVID-19 pandemic.

2

(a) Show the short run e§ects of this policy using the

Five-Figures Diagram

we drew in class; goods market, money market, the

IS

-

LM

curves, the interest

parity condition curve, and the

AS

-

AD

curves. Explain your answer. [8 marks]

(b) How about the e§ects of this policy in the medium run? Assume that before

the changes, the economy was at the natural level of output. To answer this

question, draw the

Two-Figures Diagram;

the

IS

-

LM

curves and the

AS

-

AD

curves. Explain your answer. [5 marks]

(c) The more the central bank buys, the lower the interest rates that the govern-

ment has to pay on new borrowing, and the more the government can borrow.

Does this mean the government can spend as much as it wants and protect the

economy from damage done by the virus? Explain your answer. [2 marks]

J.M keynes in the general theory of employment, interest and money said, "the propensity to consume and the rate of new investment determine between them the volume of employment (in an economy). "how was this different from the classical theory that prevailed before this? what did keynes focus on that completly revolutionized economic thinking forever? use the keynesian cross diagram to explain your answer and then explain why keynes theory and particularly his policy is even more relevent that ever to todays COVID depression.

suppose you are hired by the Canadian government to give advice on capital spending with the goal of improving economic growth.
Given the many types of capital,how would you allocate $1000000 of capital spending among the types of capital? provide a short explanation to justify your allocation.
You may make assumptions about the canadian econmony as i do not expect you to have full information.

1. If a central bank makes an unsterilized purchase of foreign reserve assets, what happens to its monetary base? ___________

2. How does a sterilized sale of foreign reserve assets affect the domestic interest rate? _________________

3. If a country has a current account surplus, will it have capital inflows or outflows? _____________

4. If a country with a fixed exchange rate has a balance of payments deficit, would it buy or sell reserve assets to maintain the par value of its exchange rate? _______________________

5. If a county with a fixed exchange rate is expected to devalue its exchange rate, what might force devaluation? ___________ ___________

6. What must a country control to have a fixed exchange rate and an independent monetary policy? __________ ___________

7. When a group of countries adopt a common currency, this is known as a _______ ________?

8. What are countries that borrow from the IMF required to do?   _________ _________ ____________________

9. How does the creation of a currency board constrain a country’s monetary policy? _____________________

10. Panama uses the U.S. dollar as its currency. This is known as ______________?

Overfishing is caused by the “Tragedy of the Commons.” Explain why.

What is a rebound effect? Give examples of micro- and macroeconomic rebound effects. Does the existence of rebound effects strengthen or weaken the case for a government program to weatherize the homes of low-income homeowners to reduce carbon emissions?

please explain as many as possible and as clearly as possible :
1. Why 5G will be a rollout rather than a launch? 2. What are the concerns about 5G in terms of privacy?

What is Averch–Johnson (AJ) Effect? Show the additional social welfare loss caused by AJ Effect in the case of a regulated natural monopoly with average cost pricing with a graph and explain.

1. In 2009, President Obama with Congressional approval increased government spending and decreased lump-sum taxes in response to the financial crisis.  
   1. Graph and explain what happens in both the ISLM model and the ADAS model (with the upward sloping SRAS curve) in the short run. Be sure to discuss real output, real interest rate and the price level in your answer.
   2. Graph and explain what happens in the long run if the Fed does not change monetary policy. Be sure to discuss real output, real interest rate and the price level in your answer. You may use your graph from part a.
   3. Fill in the table based on your answers to a. and b.

Is a ban on incandescent bulbs socially efficient? What about leaving the decision to the market? Explain your answer with a graph.

1. Answer the following questions for each of the three situations outlined below:
   1. What is the good or service being consumed? Does its consumption create externalities? If so, what they are and are they positive or negative?
   2. If the example involves externalities, identify who creates the externality and who benefits or suffers from it.

#1--Antibiotics are becoming less effective as bacteria evolve, a process accelerated by overuse of antibiotics by doctors. Nevertheless, a “survey of physicians showed they were most likely to choose the broadest spectrum [antibiotic] to treat pneumonia, despite guidelines to the contrary; contributing to resistance rated lowest among seven determinants of their choices. (The Milken Institute Review, Third Quarter 2012)”

#2--An AP article (Yabba Dabba Don’t, AP, April 7, 2019) reported on a house built by a rich retiree in Hillsborough, a posh suburb of San Francisco. The house is “…an elaborate homage to “The Flintstones” family…The bold, bulbous house is surrounded by Stone Age sculptures inspired by the 1960s cartoon, along with aliens and other oddities...” The town says the property is “an eyesore.” The resulting controversy “has sparked…an online petition signed by thousands to preserve the attention-grabbing property, visible from a nearby highway….”

#3--Avocados have become increasingly popular in China, Japan, and Canada, and some avocadoes that used to be exported to the United States are now sent to these other countries.   Prices for avocadoes in the US have increased dramatically as a result, causing some restaurants to add a surcharge on orders of guacamole.

Comment on income levels and the substitution effect? Does the amount of disposable income really matter? (In other words, once your necessities (food, water, shelter, clothes, insurance, cell phone, etc. are paid, do you "need" to buy anything else (concert tickets, a new purse, a collectible, etc?