5. Mention any 2 markets in the Kenyan economy faced with information asymmetry. How dothese markets deal with the information asymmetry? (*6. Explain why a high productivity worker maybe more likely to signal productivity than a lowproductivity worker (lind t

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5. Mention any 2 markets in the Kenyan economy faced with information asymmetry. How do these markets deal with the information asymmetry? (*

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1.During the Oklahoma Land Rush of 1889, which role of prices would have been on display if not for the government’s mismanagement of this market? The rationing role which states that as prices rise, only those buyers most willing and able to pay would have gained the land they desired. The resource directly role which states that fluctuating prices signals seller where to allocate resources like land and capital. The information role that teaches us how rising prices conveys a message that prices were below equilibrium when the government conducted the land rush. The barter-elimination role of prices because the invisible hand would have led to a price above zero and an efficient market outcome. All the above.
3. What happens to the good-market equilibrium output if the following event oc- curs in the economy? Briefly explain how it affects the relevant component(s) of planned spending. (a) The interest rate for treasury bills rises while people's expectation of infla- tion rate is constant. (b) The government decided to cut taxes. (c) The information-asymmetry problem worsened. (d) Investors become more optimistic about the future so that their autonomous investment increases.
2. The Public Utility Regulatory Commission (PURC) increased the price of electricity by 78%. (i) With the help of a diagram, explain how this price increase will affect demand and supply of electricity? Will there be a shortage or surplus supply of electricity? (ii) Following the threat of strike action by the Trades Union Congress (TUC), the government intervened to set a price ceiling and agreed to pay the difference between the price ceiling and the equilibrium price. What will happen to quantity demanded and supplied of electricity if the government fails to pay the difference between the price ceiling and equilibrium price? Will there be a surplus or a shortage in the electricity market? Explain with the aid of a diagram.
4 An example of an agriculture commodity with particularly volatile prices is coffee. The price of coffee on world markets fluctuates a great deal from year to year because of weather and because of the entry of new suppliers in Brazil and new supplying countries such as Vietnam. Can anything be done to avoid the kind of boom-and-bust cycle that occurs regularly in coffee markets? Please specify at least two possible was to solve this
uppose that the salary range for recent college graduates with a bachelor's degree in economics is $30,000 to $50,000, with 25 percent of jobs offering $30,000 per year, 50 percent offering $40,000 per year and 25 percent offering $50,000 per year and that in all other respects, the jobs are equally satisfying. Assume that in this market, a job offer remains open for only a short time so that continuing to search requires an applicant to reject any current job offer. Moe has just received a job offer that pays $40,000 per year. Moe should: Select one: a. reject the offer regardless of his preference for risk. b. accept the offer if he is risk averse. c. reject the offer if he is risk averse. d. only accept the offer if he is risk-neutral.
741 Ny 7:0 Mond Content X + ultra/courses/_99030_1/cl/outline manipic cempo me manipic accompis. INIU Force Completion. This test can be saved and resumed later. BILLETTE Your answers are saved automatically. * Question Completion Status: QUESTION 1 The goal of the consumer is to maximize the total utility or satisfaction derived from their purchase choices, given the unique budget constraint. To calculate total utility of a given combination of T-shirts and movies, one would use the following approach: O a. For a given combination of T-shirts and movies, survey a group of individuals to determine an average for utils to be assigned to the number of T-shirts and movies. O b. For a given combination of T-shirts and movies, use Google to identify the number of utils associated with the number of T-shirts and movies and thenlum them. O c. For a given combination of T-shirts and movies, assign a number of utils to that combination. O d. Use utils as a measure of utility, assigning a…
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224 Unit1_Assignm... O Search (Alt+Q) Caroline Donald= yout References Mailings Review View Help Questions 1. Howard needs to buy a laptop computer to start online university courses. The price at the local computer store is $650. The identical computer is available at one online site for $605 and another site for $622. All prices include the appropriate sales tax. The accompanying table indicates the typical shipping and handling charges for the computer ordered online. Shipping method Standard shipping Second-day air Next-day air Delivery time 3-7 days 2 business days 1 business day Charge $13.99 $18.98 $23.98 a. Using the required textbook for the course, define "opportunity cost" in economic terms. UNIT 1 BU224 ASSIGNMENT TEMPLATE (The true cost of anything is what you must give up to give it- all cost are opportunity cost.) b. In this situation, what are the opportunity costs of Howard choosing to buy online instead of at the local computer store? Note that if you buy the computer…
2. (All right, this one IS tricky. Use the hints and do the best you can!) Suppose there are 2 brothers - Cain and Abel. Cain has a utility function U(L,R) 2min {L,R}, where L and R are left and right shoes respectively. Abel's utility function for shoes is U(L,R)-3L+3R. Further, suppose Cain's endowment is (4 left, 8 right) while Abel's endowment is (7 left, 2 right). a. b. C. d. e. Carefully construct the Edgeworth Box for this exchange economy being careful to label everything and to indicate the box's dimensions. Label the endowment point as well as the initial indifference curves for both Cain and Abel. Label the Contract Curve. (Hint: they cannot trade ½ a shoe.) What are the possible equilibria in this economy? Describe how those equilibria would occur.
5. Say’s Law _____________ because ___________. The Law of demand is _____ true because: Always holds true; As prices increase, new suppliers enter a market leading to an increase in supply and lower prices over time; almost always true; sometimes no matter what the price we will buy anyway. Always holds true; Entrepreneurs are the key to income creation and therefore the ultimate demand for all goods and services; always true; as prices change our willingness and/or ability to buy changes. Is often true; of the law of supply, which shows that as prices increase, quantity supplied will rise; is always true; demand curves can never be vertical. Is rarely true; it is consumer wants and needs the emerge in a market first, then suppliers enter to capitalize on what we want or need; valid; there is a proven inverse relationship between prices and quantity demanded. Is often, but not always true; Through the coordinated activities of government agencies, adequate supplies of food,…
2. Differentiate between the two market forces.
7 “Conflicts in Russia and Ukraine are likely to affect how much wheat is available for purchase in global market since Russia and Ukraine are major global wheat exporters. When there is a shortage of wheat, bread prices usually rise. Therefore, the price of bread and other bread based products would rise in different wheat importing countries globally.” Make a judgement about whether the argument is likely to be based on sound or false premises. Give reasons for your answers