3. Consider the market for railroad transportation (number of railroad trips offered/produced and demanded). The two...

3. Consider the market for railroad transportation (number of railroad trips offered/produced and demanded). The two parties directly involved in a railroad transaction, the railway company and passengers, both benefit from having railroad transportation. Assume that railway engines create sparks that ignite surrounding woodlands and farmlands, thus, destroying timber and crops. (a) Use a demand-supply diagram to illustrate the market equilibrium in railroad transportation. Show the demand and supply curves. Label the market equilibrium quantity Qm and the market equilibrium price Pm. (1 pt.) (b) Use the concept of externalities to argue that the free market will not produce the socially desirable quantity of railroad transportation (Qsd). Use your demand-supply diagram to compare the free market and the socially desirable quantities of railroad trips (i.e. which one is greater?). Is this a positive or a negative externality? Is it a production or a consumption externality? Hint: Do you have two different marginal cost curves or two different marginal benefit curves? (2 pts.) (c) What kind of government policies could be used to improve upon the free market outcome in 3(a)? Discuss briefly two possible policies. (1.5 pts.)

4. (a) Define the terms Gross National Product (GNP) and Real Per Capita GNP. (1 pt.) (b) State and explain three limitations of using real per capita gross domestic product as a measure of national well-being and progress when comparing different countries. (1.5 pts.)

5. In 2017, the population of Sugarland was 200 million and its GNI (or GNP) was $80 billion. You are also told the following facts about this country: annual birth rate is 3.5%, annual death rate is 1.5%, annual net migration is 0.5 million, and GNI increases each year by $5 billion. (a) What will be the population of Sugarland in 2018? Note that net migration is given in millions, not in percentage. (1.5 pts.) (b) Calculate the per capita GNI of Sugarland in 2017 and in 2018. At what percentage rate will per capita GNI grow in this one year time period? (1.5 pts.)

Expert Solution

*We can solve only one question. For solution to other please post as a new question.

Rahul Sunny answered 1 year ago

Consider a market in which all output is produced by two firms, A and B. The...

Consider a market in which all output is produced by two firms, A and B. The market inverse demand curve is given by where a is 260 and b is 1. Both firms have a constant marginal cost equal to 3. a) Find the Stackelberg equilibrium outputs for firms A and B, the equilibrium market price, and the equilibrium profit for each firm, on the assumption that firm A is the leader and firm B is the follower. b) Repeat...

Consider a market demand curve, in which the quantity demanded is on the horizontal axis and...

Consider a market demand curve, in which the quantity demanded is on the horizontal axis and the price is on the vertical axis. If the demand curve is flat, then the price elasticity of demand is high in the absolute value. True or False? The cross-price elasticity of Good X with respect to Good Y is estimated as -0.8. When the price of Good Y suddenly increases, we expect the demand for Good X will decrease. True or False? We...

Consider two assets, A and B, in a competitive market populated by a large number of...

Consider two assets, A and B, in a competitive market populated by a large number of risk-averse agents. ForassetA: pricepA =10attime0;andpaysXA =12attime1. For asset B: price pB = 10 at time 0; and pays, at time 1, XB = 20 with probability 0.5, and XB = 4 with probability 0.5. a. Please calculate the expected return and the standard deviation of return for asset A. b. Please calculate the expected return and the standard deviation of return for asset B....

consider the following data for two products of gitano manufacturing number id units produced product a...

consider the following data for two products of gitano manufacturing number id units produced product a 11,500 units product b 1300 units direct labor cost (@ $27 per DLH) product a 0.14 DLH per unit product b 0.28 DLH per unit direct materials cost product a $2 per unit product b $2.50 per unit machine setup overhead costs $51,176 materials handling $ 55,000 quality control inspections $79,380 total $ 185,556 round to two decimal places 1. use direct labor hours...

In this question, consider the market for a pharmaceutical drug (“A”) that is only produced by...

In this question, consider the market for a pharmaceutical drug (“A”) that is only produced by one manufacturer. a) Suppose that the demand for drug A is perfectly elastic. What is the consumer surplus enjoyed by consumers in this market? Why might a regulatory authority not be concerned about the potential for harm caused by this manufacturer’s position as the sole producer? b) There is only one other drug (“B”), which is made by a different manufacturer, that can be...

Consider the market for a good that has a positive externality and that is produced by...

Consider the market for a good that has a positive externality and that is produced by a monopolist. How does the amount produced in the absence of any government policy compare with the amount that would maximize the total social surplus? Identify the total private surplus, external benefits, and total social surplus both at the level of production that occurs without government intervention and at the level of production that maximizes the total social surplus. What is the deadweight loss...

Consider a competitive market for which the quantities demanded and supplied (per year) at various prices...

Consider a competitive market for which the quantities demanded and supplied (per year) at various prices are given as follows: Price (Dollars) Demand (Millions) Supply (Millions) 60 22 14 80 20 16 100 18 18 120 16 20 Calculate the price elasticity of demand when the price is $100. The price elasticity of demand is ____ (Enter your response rounded to two decimal places.)

Consider the market for electricity. In 2015, 33% of electricity in the US was produced by...

Consider the market for electricity. In 2015, 33% of electricity in the US was produced by burning coal. Burning coal to create electricity pollutes the air and can cause health problems for humans and animals. Draw the market supply and demand for electricity and determine the level of output produced by a competitive market, labeling it Q1. Next, show the externality in the market for electricity and determine the socially optimal amount of electricity, labeling it Q*. Shade the area...

3) Suppose the number of users (i.e. total quantity demanded) for a new online messaging service...

3) Suppose the number of users (i.e. total quantity demanded) for a new online messaging service (NOMS) is: ?=?−?+??? ?h????∈(0,1),?? ???h????????????????????,????h??????. a) Interpret the parameter ?. What strategies can NOMS use to affect ?? 1 b)Suppose?=100, ?=2, ????h??????????????????????????? ???h???=? ,andthe marginal cost per user is 0. What is the profit maximising price? (1 mark)

Consider a transportation problem, shipping a product from two sources to two customers. The following table...

Consider a transportation problem, shipping a product from two sources to two customers. The following table shows the data. Write a LP model for this problem to minimize the shipping cost (unit in $) while satisfying the demand for each customer and supply for each source. You don’t need to solve your LP model. I just need a LP model only. Customer1 Customer2 Supply Source 1 $8/unit 15 15 Source 2 11 7 20 Demand 12 23

Question