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Suppose the government provides citizens with free electricity. Specifically, electricity Producers receives a subsidy that reduces the price of energy that consumers pay to zero, i.e. the equilibrium price with the subsidy is zero. Using the tools of analysis developed in this course, demonstrate that removing the subsidy will make consumers worse off but will nevertheless improve society's economic welfare.
There are 10 identical firms that have the common cost function c(y) = y 2 + 9. The industry demand function is given by X (P) = 200/
Using above demanded schedule, find out the elasticity of demand for each price change. (Example: when price changes from $5 to $10, quantity demanded changes from 1000 to 800 oz., so the elasticity of demand, by using average values, is 1/3 or 0...
Assume a 2 sector economy (where the two sectors are consumption and investment) where C= $100+ 0.9 Y and I=$50
Compute total revenue, marginal revenue, marginal cost, and average total cost of this natural monopoly. What is the profit maximizing output and price for this natural monopoly when the government does not regulate it?
The investment demand curve is a useful tool to summarize an important and complex relationship in the economy. The determinants that may cause this Investment Demand Curve for the U.S. economy to shift are acquisition
Find out the equilibrium market price. Find out the profits of the leader and the follower
What is the level of price, output, and amount of profit for an unregulated monopolist? Analyze the effect of regulation on the allocation of resources. Which situation is most efficient? Which situation is most likely to be chosen by government? ..
Vulnerability Analysis
Consider the following Solow model of growth. Both population and work force grow at the rate of n=1% per year in a closed economy.
In article on the steel industry, The Wall Street Journal noted that as steel prices were falling, steelmakers were not cutting production
In a simple model with no government or foreign sector, the amount of involuntary inventory accumulation at equilibrium is
Assume the US economy experiences deflation. Trace through the impact on the US macroeconomic variables to the effect on the FOREX rates.
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