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Consider the expanding input variety model of Section 13.1.
(a) Suppose that a benevolent government has access only to research subsidies, which can be financed by lump-sum taxes. Can these subsidies be chosen to ensure that the equilibrium growth rate is the same as the Pareto optimal growth rate? Can they be used to replicate the Pareto optimal equilibrium path? Would it be desirable for the government to use subsidies to achieve the Pareto optimal growth rate (from the viewpoint of maximizing social welfare at time t = 0)?
(b) Suppose that the government now has access only to subsidies to machines, which can again be financed by lump-sum taxes. Can these be chosen to induce the Pareto optimal growth rate? Can they be used to replicate the Pareto optimal equilibrium path?
(c) Will the combination of subsidies to machines and subsidies to research be better than either of these two policies by themselves?
Any change in the economy's total expenditures would be expected to translate into a change in GDP that was larger than the initial change in spending. This phenomenon is known as the multiplier effect. Explain how the multiplier effect works.
Does the PPC illustrate the law of increasing additional cost What is the opportunity cost to this student for the additional amount of study time on economics required to mover her grade from 60 to 70 From 90 to 100
The following are the demand and total cost schedules for Company Town Water, a local monopoly: Output in Gallons Price per Gallon Total Cost 50,000 $0.28 $6,000 100,000 0.26 15,000 150,000 0.22 22,000 200,000 0.20 32,000 250,000 0.16 46,000 300,0..
Neglecting inflation, find the balance of this time series at 1981, 1993 and 1999 if the quarterly discrete interest rate is ig=0.06. Also develop a flow chart for a subroutine calculating the balance Bu of a finite time series
Suppose that deposits and bank reserves pay no interest, and that banks lend deposits not held as reserves at the market rate of interest. Who pays the inflation tax (measured in nominal terms), and how much do they pay?
On the planet Omicron Persei 8, government spending is $1000, net taxes are $1200, and planned investment is $1400. Consumers spend according to the equation C = 100 + 0.8Yd, where Yd represents disposable income.
John has decided to start his own lawn-mowing business. To purchase the mowers and the trailer to transport the mowers, John withdrew $1,000 from his savings account, which was earning 3% interest, and borrowed an additional $2,000 from the bank.
She estimates that the total cost of operating the office is approximately $48,000 per year. The potential revenue is estimated as $100,000 per year. Compute accounting cost, accounting profit, conomic cost, and economic profit.
What is economics system? What are the types of economics system? Briefly explain each type of economics system by giving examples of nations that are close to each type
Compute the profit-maximizing price and quantity, and illustrate with a complete graph.
compute the three-firm and four-firm concentration ratios for each sector, and rank the sectors by degree of industry concentration.
The mean one-year return for the NASDAQ, a group of 3,200 small and medium-sized companies, was 16.9%. Historically, the one- year returns are approximately normally distributed, the stan- dard deviation in the S&P 500 is approximately 20%,
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