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Suppose that market demand for golf balls is described by Q = 90 − 3P, where Q is measured in kilos of balls. There are two firms that supply the market. Each firm has a constant unit cost of 10.
a. Suppose the firms compete in quantities. How much does each firm sell in a Cournot equilibrium? What is the market price and what are the firms’ profits?
b. Suppose the firms compete in price. How much does each firm sell in a Bertrand equilibrium? What is market price and what are the firms’ profits?
An economy is operating with output $400 billion below its natural level, and fiscal policymakers want to close this recessionary gap. The central bank agrees to adjust the money supply to hold the interest rate constant, so there is no crowding out.
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What warnings with you give forecasters in using statistical demand equations for estimating consumer demand? How can the problems associated with using static equations in a dynamic world best be dealt with? Elaborate
Explain the so-called "Ricardian" model of international trade, including its assumptions, and use this model to explain why and how both of the two countries considered countries gain from free trade between them. What determines the relative extent..
The marginal damage to your neighbor's business is a function of how many alligators you keep and the amount of money spent on a fence that separates your properties:
Fiscal policy is most effective in a fixed-rate system when capital is perfectly mobile because there is no domestic “crowding out.” Explain what is meant by the term “crowding out,” and then critically evaluate the previous statement using the IS/LM..
Flora's Flowers operates in a perfectly competitive market. At the point where marginal cost equals marginal revenue.
Real GDP will increase
Why does the government grant patents to investors? Why does the government give monopoly power to utility companies?
First, use a T-account to show how a $100 deposit affects the balance sheet. Separate the funds into required reserves and excess reserves using a required reserve ratio of 0.1. Second, demonstrate what happens to the balance sheet when the bank loan..
What data the organization needs in order to make good decisions and how the use of macroeconomic indicators enables organizations to improve their forecasts of the key decision-making data.
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