QUESTION 5

1. Which of the following statements is true about price ceilings?

   		price ceilings create surpluses for goods but shortages for services.
   		Price ceilings cause goods to be rationed by some other means than legally determined market prices.
   		Ration coupons are the only way to ration goods when price ceilings are in place.
   		All of the other statements are correct.

QUESTION 6

1. Which of the following statements is correct?

   		Frictional unemployment is the result of friction between labor and management over how best to perform work.
   		Structural unemployment is unemployment resulting from changes in the structure of consumer demand or technology.
   		Cyclical unemployment is also called wait unemployment because this unemployment depends on the timing of the business cycle.
   		Search unemployment is the broadest unemployment category because it covers all other types of unemployment.

QUESTION 7

1. The economic performance in the Great Recession of 2007–2009 clearly illustrated the relationship that if interest rates fall, then investment spending will increase.

   True

   False

QUESTION 8

1. The law of demand states that if price increases, other things being equal, the demand for the product will decrease.

   True

   False

6. What is an asset price bubble? Should central banks burst asset price bubbles or wait until they burst and mop-up afterwards? Is there an alternative to using conventional monetary policy? [50 marks]

4. What is second degree price discrimination and third degree price discrimination? Explain with examples.

5. Compare the three types of market structure: perfect competition, monopoly and monopolistic competition.

6. Explain Giffen goods and Veblen goods and their similarities and differences in terms of price and income elasticity of demand.

7. Explain the cobweb model.

8. Explain how the elasticity of demand affects the revenue of the seller.

9. Explain the relationship between the marginal cost curve of an individual firm and the short run market supply curve in a perfect competition industry.

10. Explain the relationship between the price elasticity of demand and supply and the incidence of tax of a unit sale tax.

11. Explain the free rider problem and provide examples.

12. Explain externalities and the Pigovian solutions.

13. Explain why oligopoly firms have incentive to form cartel and yet the cartel tends to breakdown.

14. Explain Coase theorem.

15. Explain the kinked demand curve model.

Determine if a statistically significant linear relationship exists between the independent and dependent variables at the 0.01 level of significance. If the relationship is statistically significant, identify the multiple regression equation that best fits the data, rounding the answers to three decimal places. Otherwise, indicate that there is not enough evidence to show that the relationship is statistically significant.

. The meat packing company gives you the following assumptions: Price of beef=$2; price of pork=$2.50; disposable income=$1,000,000; and population=225. Given this information, use model 1 to complete the following: a. Estimate of beef demand and a 95% confidence interval around this estimate. b. Estimate total revenue c. Estimate the following elasticities: Price elasticity, Cross elasticity (that is, elasticity with respect to Pork price), income elasticity, and population elasticity. d. Should the meat packing company increase or decrease the price of beef? Why or why not?

1. Write your regression equation i.e. demand function
2. Enter data provided into excel or statplus as per instructions attached and run your regression / derive your coefficient estimates

3. A single-price monopolist has the schedules given in the table below.

a. Determine the profit-maximizing level of output, price as well as the amount of profit or loss at this level. Clarify how you obtain the answer.

…………………………………………………………………………………………………..

…………………………………………………………………………………………………..

…………………………………………………………………………………………………..

b. Compare between the perfect competition and monopoly market structure.

…………………………………………………………………………………………………..

…………………………………………………………………………………………………..

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[Total: 10 marks]

What approach attempts to chart historical price movements of financial instruments to predict future price movements instead of trying to calculate the instrument's fair price? Historical Price Chartist Chartalist Market price

Explain the difference between price-taking and price-setting firms. Give an example of your experience with each. What are characteristics of the four market structures. How a business, thinks of the margin or uses marginal analysis to operate daily, provide  gexamples of what it means to optimize and how optimization problems are prevalent in people's life).

What tools or resources I can used to develop confidence and comfort-ability with estimation, simple linear regression, and/or multiple regression?

Calculate the percent change in the price of stamps for 1983 and today.

Calculate the percent change in the price level for 1983 and today.

What do you think will happen to the real price of stamps between 1973 and 1983? Between 1983 and today? Notice that I am asking for a prediction before you make the computation.

Calculate the real price of stamps.

Are the changes in the real price consistent with your prediction?

What does it mean if the real price falls? Rises? Remains constant?