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1. What combination of shocks could make the new budget line be completely inside and steeper than the initial budget line?
2. What happens to the budget line if all prices and income doubles?
d. Describe algebraically the inverse demand curve faced by the firm in this instance. Provide a graph that is consistent with your answer. Based on this graph, explain why this is called the kinked demand model. (Hint: the equation for th..
Suppose the person lives for two periods, U = u(c1) + bu(c2), and can acquire an asset at price q, with c1 = w1 – qa and c2 = (d + q*)a + w2, where d = dividend and q* = selling price.
what happens to the price of bonds when the fed sells bonds? what happens to the interest rate? what happens to the
You're the manager of monopolistically competitive firm. The present demand curve you face is P=100-4Q. Your cost function is C(Q)=50+8.5Q2 (That's Q squared).
The return on investing in a machine is 5% and the inflation is 4%.
if the price elasticity of demand for bananas is -1.5 and the price elasticity of demand for grapefruit is -2.5 and the
The best computer company just developed a new computer chip on which it immediately requires a patent - draw a diagram that shows the consumer surplus, producer surplus and total surplus
Assume that the u.s. has 400 units of K (capital) and 300 units of L (labor) while Mexico has 75 whits of K and 125 units of L. In both countries it takes 3K/L to produce each unit of X but only 2K/L to produce each unit of Y. Which nation has the co..
use a principle or principles discussed in the course to explain some pattern of events or behaviour that you
Medicare recipients pay a monthly premium for coverage, must meet an annual deductible, and have a co-payment for doctors' office visits. What impact would an increase in the monthly premium have on their consumer surplus? What would be the impact of..
Professor P cares about how many hours that Mr. A teaches and about how much she has to pay him. Professor P wants to maximize her payoff function, x-s, where x is the number of hours taught by Mr. A and s is the total wages she pays him. If Mr. A te..
Suppose A and B choose the amount they spend on the school independently. What is the Nash equilibrium level of the school's quality in Little Society?
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