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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?
circular flow of national income?
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Firm effects are more important the industry effects. What does this mean? Can you think of situations where this might not be true?
A recent article estimated that the elasticity of the rate of gonorrhea with respect to the price of beer is about 0.8. If this estimate is correct, are unprotected sex and beer su
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Given the above trade between the two countries, explain the trade effects on product prices, and factor incomes. Why do these effects occur?
The aggregate production function Definition Imagine the national economy during a short period of time (say one week). We refer: L: total amount of work used duri
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