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Sometimes market activities (production, buying, and selling) have unintended positive or negative effects outside the market's scope. These are called externalities. As a policy maker concerned with correcting the effects of gases and particulates emitted by and local power plant, answer the following questions:
Draw and explain a production possibilities frontier for an economy that produces milk and cookies. What happens to this frontier if disease kills half of the economys cow population.
Illustrate what is price should Big Steel set to maximize its profits. Explain how much steel will Big Steel sell? How much will its competitors sell.
Suppose both Smith and Jones utility functions of U(X,Y) = XY1/2. Smith is endowed with (X, Y) = (9,25) and Jones is endowed with (X, Y) = (25,9). Draw an Edgeworth box with indifference curves through this endowment.
Illustrate what would happen to the total employment, the size of the labor force, and the unemployment rate? Show the results graphically.
Consider an oligopolistic market with two firms. Each of them produces using a cost function then what is the value of that maximizes total consumer well-being?
Compute the equilibrium interest rate by setting the overall demand for money equal to the overall supply of money.
If she has invested in a stock fund that averaged a 15% rate of return over that period, and she expects to make the same annual investment and get the same performance in the future.
Illustrate what are major arguments in case for income equality. Illustrate what are major arguments in case for income inequality.
Determine aggregate private savings, Sp, and government savings, Sg. Is the government running a surplus, a deficit, or a balanced budget?
Calculate and describe the Nash equilibrium (quantities, price and profits) in the game in which both firms choose their quantities simultaneously.
A nation whose interest rate is rising more rapidly than interest rates in other nations can expect the international value of its currency to appreciate.
If you were to be a retailer, would you want to sell elastic or inelastic goods? State your reasons in your answer.
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