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1. Consider two projects. The first project pays benefits of $90 today and nothing else. The second project pays nothing today, nothing one year from now, but $100 two years from now. Which project would be preferred if the discount rate were 0%? What if the rate increased to 10%? 2. Suppose that the original before-tax demand curve is P = 98-2Qd and that supply is P = 2+2Qs. Now suppose a $3 unit tax is imposed on consumers.a. Use supply and demand diagrams to show the effect of a $3-unit tax imposed on the demand side. b. What is the before-tax equilibrium price and quantity?c. What is the after-tax equilibrium quantity?d. Calculate the economic incidence incurred by producers and the economic incidence incurred by consumers.e. How much tax revenue is raised?
Raising chickens requires several types of feed, such as corn and soy meal. Consider a farm in the former Soviet Union. Try to describe how decisions on the number of chickens to b
Explain the difference among saving and investment as explained by macroeconomists. Which of the following situations represent investment or saving? Explain: a) You u
Q. Demand for money and GDP? The demand for money also relies on the GDP as GDP is closely associated to national income. If you choose to hold a fixed proportion of your wealt
Will improving customer service result in higher stock prices for the companies providing the better service? When a companys satisfaction score has improved over the prior years r
What is total surplus in net gain? Total surplus in net gain: The total surplus generated into a market is the total net gain to consumers and producers through trading into
The city of Cabernet is very famous for its production of wine. The inhabitants of the city have an aggregate demand for wine that can be described as follows: D(p) = Q d =150-
Q. Explain function of AS-AD model? The function of AS-AD model is to extend IS-LM model so that we can analyze situations where Y > Y OPT . To achieve this, we should make P e
Financing of the external payments deficit: The trend in India's widening CAD during the second half of the eighties, both in absolute terms and also as a proportion of the
Absolute income hypothesis
Q. Determination of variables in AS-AD model? Once Y and P are determined, all other endogenous variables would be determined as well. Interest rate is determined by money mark
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