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Suppose Lia has an income of Y =$500 and only consumes two goods: memory sticks (to store free economics papers she downloads from the library) and hardcover novels (which she refuses to check out from the library). Furthermore, let the price of memory sticks be P = $25 and the price of hardcover novels be P = $20. Suppose Lia's preference leads her to purchase 10 novels and a memory stick of 12pcs.
1. Before Lia makes any purchases, the place she purchases books from offers the following deal: any additional books purchased after the first 10 will get a 25% discount. Use a revealed preferences argument to explain how we know Lia will be better off. Would this be true for all utility functions? Explain why or why not.
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Suppose you are the manager of a firm that sells its product in a competitive market at a price of 50. Your firms cost structure is c=40 + 5Q2. The profit maximizing output for your company is;
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Three students want to order pizza for dinner and they have decided to play the following contribution game in order to collect the money. Each student takes turns in order to place money inside a jar. If at least two students contribute the pizza..
Given the high levels of unemployment, many workers aren't getting wage raises very easily. Will the change in productivity likely increase or reduce prices in the economy?
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How might the Wyoming state government construct a policy that would induce the natural gas companies to produce the socially optimal amount of natural gas?
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