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The city of Spillsville is worried that its municipal landfill is going to fill up. As a result, the city's sanitation engineer has proposed three solutions: Solution 1: Require each household to reduce its garbage disposal by 100 pounds per month. Solution 2: Impose a tax of $.05 per pound of garbage that will overall result in the same decline in garbage disposal as Solution 1. Solution 3: Impose a tax of $.50 per pound of garbage over 500 pounds per month. Which of the three solutions would an economist prefer to have implemented? Explain your thinking.
According to the political business cycle theory, if the Fed wanted to see a President re-elected, prior to the election it might
Use the IS-LM, AD-AS model to illustrate the short-run and long-run effects of an unexpected decrease in the money supply. [Assume that the economy moves immediately to the new intersection of the IS & LM curves.] Repeat part a assuming that the decr..
You are in the process of deciding to buy a car. You found a brand new Hyundai Elantra for $22,000. You read the reviews and they all sound good. You plan to keep it for 5 years. You do some rough calculations on the amount of expenses which includes..
Illustrate what are the most important determinants of the demand function that a firm faces for the commodity it sells.
Suppose David spends his income (I) on two goods, x and y, whose market prices are px and py, respectively. His preferences are represented by the utility function u (xy)= lnx + 2 ln y (MUx=1/x, MUy=2/y). Derive his demand functions for x and y.
You are a management consultant for a 30-year old partner in a large law firm. In a meeting, your client says: “According to an article in the New York Times, 57 percent of large law firms have a mandatory retirement age for partners in the firm.
Over the next three years, a firm is expected to earn an economic profit of $900,000 in the first year, $800,000 in the second year, and $700,000 in the third year. After the end of the third year, the firm goes out of business. If the risk-adjusted ..
Consider the multiple regression model with three independent variables, under the classical linear model assumptions MLR.1 through MLR.6: Let ˆ1 and ˆ2 denote the OLS estimators of 1 and 2. Find Var(ˆ1 3ˆ2) in terms of the variances of ˆ1 and ˆ2 and..
Which of the following not be considered an industrialized country? Under a progressive tax system,
As the saying goes, "the only sure things in life are death and taxes." This saying points out the result that everything having to do with taxes is an automatic fiscal policy.
A combine used for harvesting corn was purchased new 6 years ago for $400,000 with the intention of using it for its full asset life of 25 years (when its salvage value would be zero). It has a book value of $125,543 and can be sold for $130,000 now...
The best test of the performance of two different regression equations is their respective values of the coefficient of determinations. Equations that perform well in explaining past data are likely to generate accurate forecasts.
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