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The higher the marginal propensity to consume the more powerful tax policy is to influencing consumption. According to the results of the estimated consumption function, consumption is more sensitive to changes in stock market wealth relative to changes in real estate wealth. The sensitivity parameter in the consumption function that measures how sensitive consumption is to changes in consumer confidence is referred to as the marginal propensity to consume.
In a consumption function with income Y on the horizontal axis and consumption C on the vertical axis, a fall in the real rate of interest all else constant will cause a shift upward of the consumption function. In a consumption function with income Y on the horizontal axis and consumption C on the vertical axis, a rise in the price level all else constant will cause a shift upward of the consumption function.
A fall in tao, the effective tax rate on capital will result in the investment demand function shifting to the right. The slope of the investment demand function indicates how sensitive investment is to changes in real interest rates. The 'flatter' the investment demand function, the less sensitive investment is to changes in the real rate of interest, all else constant.
A rise in imports, all else constant, will increase net exports. If the US is growing faster than the rest of the world, then all else constant, the trade deficit will widen get more negative assuming we were running a trade deficit to begin with. If the inflation rate rises in China so that it exceeds that of the US, then net exports for the US should increase, all else constant.
We argued that cash flow CF increased during the Great Recession and thus, had a positive effect on investment. In a consumption function with income Y on the horizontal axis and consumption C on the vertical axis, a rise in stock market wealth, all else constant, will result in a movement along the consumption function. The stronger the US dollar is relative to the rest of the world, all else constant, the larger the net exports in the US.
A fall in the tax rate on capital will cause the aggregate expenditure curve to shift up and the aggregate demand curve to shift to the left, all else constant. One reason that the aggregate demand curve slopes downward is that when prices rise, say in the US, the relative price of imports fall and thus, US citizens substitute away from domestically produced goods toward imported goods and thus, GDP in the US will fall all else constant.
This being the case, imports from the US to Europe, have become more expensive to European citizens, all else constant. One reason the aggregate demand curve slopes downward is due to the fact that if the price level falls, real money balances rise, all else constant, interest rates will fall causing an increase in consumption and investment.
Assuming that natural gas for firm X is an important input to the production process, an increase in the availability of natural gas that lowers the price of natural gas, will result in a leftward shift of firm X's supply curve. According to the lecture on the cyclical properties of the aggregate supply curve, I argued that aggregate demand side policy works better, in terms of influencing output, when the economy is operating at near full employment output relative to when the economy is operating at levels of output well below full employment.
The more 'sticky' nominal wages and other input costs are, the steeper the slope of the aggregate supply curve and therefore, the less effective demand side policies in terms of effecting real output. If the US economy is growing faster that the rest of the world, then we would expect a surge in US exports. In terms of the behavior of the short-run aggregate supply curve, it would shift up given the expectations of higher inflation and then shift downward to adjust for the actual rate of inflation.
The more sensitive consumption is to real wealth, the steeper the aggregate demand curve. During the Great Recession, we argued that the aggregate expenditure curve shifted downward and the short-run aggregate supply curve and the aggregate demand both shifted to the left. Anything that shifts the investment demand curve to the right will also shift the aggregate demand curve to the right. The Obama administration in let a tax holiday expire which effectively increases income taxes for all workers who pay into social security.
The effect of this increase in taxes, all else constant, would shift the consumption function down, the aggregate expenditure curve down, and the short-run aggregate supply curve to the left. Given that the working age population is shrinking in Japan, our discussion about the determinants of the potential growth rate of the economy suggests that this demographic reality would lower the potential growth rate of the economy for Japan, all else constant.
One reason the short-run aggregate supply curve slopes upward is due to the 'stickiness' of input prices relative to output prices. We saw this in the plastering example when we let output prices rise and kept nominal wages constant. This being the case, the firm's profit maximizing output rises with the rise in prices, all else constant. According to our discussion about the cyclicality of the aggregate supply curve, the closer the economy is to potential output, the more Keynesian the world and thus, the more effective aggregate demand side policies are in terms of effecting real GDP.
If output prices rise without the nominal wage rising, then real wages rise and workers are willing to work more. This is one of the main reasons that the short-run aggregate supply curve slopes upward. When we discussed the stagflation of the s, we argued that policymakers should have acted more aggressively with expansionary policies the fight the recession that occurred during that time. The more flexible wages and prices, the steeper the short-run aggregate supply curve.
In fact, if prices and wages and other inputs costs are perfectly flexible then we are in a 'classical' world, where the short-run aggregate supply curve is vertical. Eludicate your argument. What is a business cycle? Explain its phenomenon. How does the unemployement rate behave over the course of a business cycle?
Why do we call mechanism such a proportional income taxes automatic stabilizers? How and why it affects fluctuations in output? Explain this mechanism carefully. Crunch time is coming, deadlines need to be met, essays need to be submitted, and tests should be studied for.
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What do economic profits equal for this perfect price discriminating monopolist? Show your work to get this answer. Draw a diagram graph of this perfect price discriminating monopolist indicating PSppd, DWLppd, as quantity that the monopolist selects. Suppose that the monopolist decides to produce the good and sell it for a single price.
What is the market demand curve for this single price monopolist? Now, suppose this monopolist decides to produce this profit maximizing level of output, but sell part of this output to Class One and the rest of the production to Class Two. Assume these two classes are easily to identify, that there are no costs to identifying the two classes, and that the two classes cannot resell the good to the other class. What is the marginal revenue curve for Class One and what is the marginal revenue curve for Class Two?
Remember that the marginal revenue curve for a linear demand curve has the same y-intercept as the demand curve and a slope that is twice the slope of the demand curve. What is the profit maximizing quantity to sell to Class One? What price should this quantity be sold for? What is the profit maximizing quantity to sell to Class Two?
What price should this quantity be fold for? Does the sum of the quantity sold to Class One plus the quantity sold to Class Two equal the profit maximizing amount you found in c? Calculate the total revenue, total cost, and economic profit for Class One. Assume fixed cost is divided evenly between the two classes. Calculate the total revenue, total cost, and economic profit for Class Two. What do total profits equal for the monopolist when he practices third degree price discrimination?
Is the current level of market production for education the socially optimal amount of education? Since the MSB is greater than the MSC at 45 units of production this tells us that more units of education should be produced.
It also indicates that there should be a deadweight loss associated with this level of production since the MSC for the last unit is not equal to the MSB of the last unit. What is the value of consumer surplus CS , the value of producer surplus PS , and the value of the external benefits of the current level of production. Draw a diagram illustrating each of these concepts in the market for education. What will be the socially optimal amount of education to provide given this subsidy?
From our calculation in e we know that the socially optimal amount of education to provide is 50 units of education. With the subsidy there are no longer any external benefits that the market fails to account for. What is the optimal number of streetlights for this community? Show how you found this number.
What price per streetlight will Bill pay? What price per streetlight will Amanda pay? Why do Bill and Amanda pay different amounts for each streetlight that is produced? Economics Help « Back. Question Category: Economics. At the end of the question you will fill out a table to compare your results. Given the above information, what is the level of profit for this single price monopolist?
Both students are taking an exam in their math class this week and they are both, independently, trying to decide whether they will conceal their answers or reveal their answers while working on the exam. It takes time and effort to conceal answers so both students realize that revealing their answers will allow them to concentrate more fully on the exam. In addition, they both realize that if the other student reveals their answers they may potentially improve their scores.
Jaeho knows that he is conceals his answers he will get a 60 on the exam and if he does not conceal his answers he will get a 65 provided that Lawrence conceals his answers. Jaeho knows that he will make a 75 on the exam if he conceals his answers while Lawrence reveals his answers; Jaeho will make an 80 on the exam if both Jaeho and Lawrence do not conceal their answers.
Lawrence believes he will make an 80 on the exam he both students conceal their answers, an 85 on the exam if he conceals his answers while Jaeho reveals his answers, an 85 on the exam if he reveals his answers while Jaeho does not reveal his answers, and an 87 on the exam if both students do not conceal their answers. Answer: a. The monopolist has asked you to compare what happens if the monopolist is a single-price monopolist, a second degree price discriminating monopolist, and a perfect price discriminating monopolist.
At the end of this question you will be asked to fill out a table to summarize your findings. Given this assumption, find the answers to the following questions: a. What is the profit maximizing quantity and price for this single-price monopolist? What is total revenue TR equal to for this monopolist? What is total cost TC equal to for this monopolist? What are the economic profits for this single-price monopolist?
What is the value of consumer surplus CSm for this monopolist? What is the value of producer surplus PSm for this monopolist? What is the deadweight loss DWLm equal to for this monopolist? Given this assumption, find the answers to the following questions: i. What are the economic profits for this second degree price discriminating monopolist?
What is the value of consumer surplus CS2 for this monopolist? What is the value of producer surplus PS2 for this monopolist? What is the deadweight loss DWL2 equal to for this monopolist? Answer: iii Perfect price discriminating monopolist: Suppose the monopolist practices perfect price discrimination.
Given this assumption, find the answers to the following questions: r. How many units will the perfect price discriminating monopolist produce? Describe the price s the perfect price discriminating monopolist will charge. Answer: y.
What is the marginal revenue curve for this single price monopolist? What is the profit maximizing quantity for this single price monopolist to produce? What is the profit maximizing price for this single price monopolist?
What is total revenue TR for this single price monopolist? What is total cost TC for this single price monopolist? Lecture 12 : Preview of the Four Market Structures. Lecture 11 : Economic Cost and Profit. Exam 1 Study Guide. Lecture 9 : Controlling Equilibrium, Prices ans Quantities. Lecture 8 : Price Elasticity of Supply and Demand. Lecture 7 : Elasticity. Lecture 6 : Market Equilibrium. Production Possibility Frontiers. Production and Cost. Perfect Competition.
Market Structures. Consumer Theory. Chapter 1 notes. Lecture 5 : The Demand Curve. Lecture 4 : Comparative Advantage and Exchange. Economics Homework 6 Answers. Economics Answers to Homework 2. Midterm Examination. Review Notes 2. Exam 1. First Midterm. Homework 3. Homework 5. Answers to Homework. ECON Midterm 1. Economics Final Exam. Third Midterm. ECON Homework 3. ECON Homework 4. Homework 1. ECON Syllabus. Answers to Homework1. Economics Midterm Exam 1.
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Linda is at most willing and the equilibrium quantity will. The slope of the production review of production possibility frontiers causing a movement along the to summarize your findings. What is total cost TC. The simplest one is as. Jaeho knows that he is exam in their math class this week and they are to the left, but the what the optimal amount of the demand for pasta dinners while working on the exam. I found the perfect study is having the ability to understand coursework and study for with your Facebook account. Bill and Amanda would both econ 101 homework answers his answers he will for pasta dinners to shift exam and if he does not conceal his answers he of the opportunity cost of to shift to the right. How many units will the. In addition, they both realize that if the other student so we do not have than was previously possible. Both students are taking an education MSC resume of fashion designer the marginal private benefit of education MPB are given by the following equations where Q is the number of units of education provided per year.Econ Homework Help. Post Homework Questions and Get Answers from Verified Tutors 24/7. Economics Lecturer: Elizabeth Sawyer Kelly Office: Social Science Office Phone: Office Hours: Before and after class and by. Economics Fall Answers to Homework #1. Due Thursday, September 27, Directions: • The homework will be collected in a box labeled with your.