Substitution effects of an increase in price of a product

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Q1. GDP calculations do not directly comprise the economic costs of environmental damage - for example, global warming, acid rain. Do you think these costs should be comprised in GDP? Why or why not? Elucidate how should GDP be amended to comprise environmental damage costs?

Q2. Using the utility maximization rule as your point of reference elucidate the income also substitution effects of an increase in the price of a product with no change in the other product?

Q3. Total government demand is P = 750 - 8P also all five firms produce at a constant marginal cost of $50. For security reasons, the government has imposed restrictions on a permit a maximum of five firms to compete in this marketplace.

Reference no: EM1311983

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