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In an article about the financial problems of USA Today, Newsweek reported that the paper was losing about $20 million a year. A Wall Street analyst said that the paper should raise its price from 50 cents to 75 cents, which he estimated would bring in an additional $65 million a year. The paper’s publisher rejected the idea, saying that circulation could drop sharply after a price increase, citing The Wall Street Journal’s experience after it increased its price to 75 cents.
What implicit assumptions are the publisher and the analyst making about price elasticity?
Use a production possibilities frontier graph to illustrate the trade-off to an economy between producing consumption goods and producing capital goods.
The economy is experiencing a contraction (recessionary gap) of $400 billion. What government spending stimulus would you recommend to move the economy back to full employment if the MPC is 0.75? Would your policy be any different if the MPC were ..
Define and explain technological advance, and describe how does technological advance enter into the definition of the very long run?
In the early 1990's, a study found that moderate daily consumption of red wine reduced the incidence of heart disease in labratory rats. As a result of national press coverage of the report, the demand for red wine increased dramatically. Assume t..
You heard that you are being transferred to California where housing is 50% more expensive. In negotiating a new salary, your objective is to keep your real income constant.
Suppose a monopolist producing Q units of output faces the demand curve P =20 -Q. Its total cost when producing Q units of output is TC = F + Q2, where F is a fixed cost. The marginal cost is MC = 2Q. a) For what values of F can a profit-maximizing..
A production lot of 25 units required 103.6 hours of effort. Accounting records show that first unit took seven hours. What was the learning rate?
Michigan is offering financial incentives to improve health. Using economic model(s) demonstrate the impact of such policy on efficiency of the medical care system.
The fiscal policy measure that has more direct impact on the economy is an increase in government spending if consumer confidence is lower than the previous month. One of the ways the President Obama stimulated the economy was through increased g..
Cammco Industries operates in a large competitive market. While there are some other comapnies in industry due to the high fixed costs of building plants, rival companies are very aggressive in their pricing strategies.
An excise tax of $1.00 per gallon of gasoline placed on the suppliers of gasoline in a market with downward sloping demand and upward sloping supply would raise the equilibrium price. a exactly $1.00 per gallon.
ublic offering bonds 20% and interst 6%. tyberius investment 10% and interest 10%. sludge FM bank 20% and interest 12%. retained earning 15% and interest 10%. commen stock 25 and interest 15%.
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