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1. Consider a world with two assets: a riskless asset paying a zero interest rate, and a risky asset whose return r can take values +10% or –8% with equal probability. An individua
Within analysis of perfect competition, we distinguish between the short run and the long run on the basis that use of some input factors is fixed in the short run, but variable in
Ask qI run a company that makes household power plants that use microeconomic textbooks to generate enough electricity each day for one house. Since there are a lot of used microec
When you drop by the only coffee shop in your neighbourhood, you notice that the price of a cup of coffee has enhanced considerably since last week. You decide it's not a big dea
graphical illustrations describing the influence of an increase in immigrants on the market supply of labour
the short run can be defined as any period of time
Specific Monopolist: Suppose a monopolist firm, I-Tech, pays $500,000 in short-run costs for its capital and unskilled labor. Its only short-run decision, th
what is diversification
Consider a market that is served by a single-price monopolist with marginal cost given by MC = $100 + Q. The market demand is given by P = $800 – 3Q. Determine the following: the f
What are the possibilities of returns to scale in production technology? Three possibilities are there as: technology exhibits (a) constant returns to scale; (b) decreasing ret
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