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- The personal likes and dislikes that make buyers more or less inclined to purchase a good are Multiple choice question. consumer preferences. always constant. always changing. producer preferences.Refer to Figure 14-7. Assume that the market starts in equilibrium at point W in graph (b) and that graph (a) illustrates the cost curves facing individual firms. Suppose that demand increases from D0 to D1. Which of the following statements is not correct? a. Point Z is a long-run equilibrium point. b. Point Y is a long-run equilibrium point. c. Points W, Y, and Z are short-run equilibria points. d. Point W is a long-run equilibrium point. PRICE Graph (a) MC ATC P₂ aa P Q Q QUANTITY PRICE P₂ a a a Graph (b) Q Qy Qx Qz QUANTITY Do D₁Market equilibrium takes place at the point where MC < MR True/ False
- According to economists, the process of optimal decision making by consumers typically yields total benefits well above the amount paid for the goods. These market-created benefits are referred to as ▼, and using the graph to the right, are represented by area Suppose now that the market price falls. According to the graph, the excess of total benefits over the total amount spent by consumers will ▼ decrease increase not change PM B Quantity (Q) QMr. Nelson, the manager of a US company, entered into a contract with an Italian company, Roma, to order some leather suitcases. The Goods were delivered on time, but with some of the zippers on the suitcase defective. Mr. Nelson contracted Roma and gave a notice that he wanted to cancel the contract. Roma responded that they only can give a reduction in the price. Who is legally right?An economy with many consumers (Amy, Hao, ...), many producers, two goods (A and B) and two inputs (L and K) is in a competitive general equilibrium. Which of the following conditions are satisfied in this economy? (Select all that apply) The absolute value of the slope of PPF (with good A on the horizontal axis) is equal to MCA / MCB, the ratio of marginal costs of producing goods A and B, at any point on PPF MRSAB = PA / PB for all consumers For every possible redistribution of goods among the consumers, some of them will be better off and some of them will be worse off. MRS = MRT MRS MRTS PA = MCA and PB = MCB MUAmy = MUHao A = PA MRTS = PA / PB MUAmy A = MCA and MUAmy B = MCB MRTS between labour and capital is the same for all firms, whether producing good A or good B. the ratio of input marginal products must be equal to the ratio of input prices MRT = MRTS for all firms, whether producing good A or good B For every possible redistribution of inputs among the firms, the quantity…
- Scenario: In the town of Isoville there are two grocery stores: Alfonso’s Ammenities and Bernice’s Bargains. The grocery stores are located at either end of the town, 1km apart. Recently, the manager of Alfonso’s Ammenities has proposed installing new self-service checkout technology, which promises to reduce the cost of each transaction at the grocery store by reducing staffing costs. The new technology is expected to reduce the marginal cost of selling a typical basket of groceries by $3. However, experience in other locations has shown that in about 25% of installations the self-service technology results in a significant increase in shop-lifting. In these cases, the need to hire extra security staff means that the marginal cost of a typical basket only falls by $1.50. Unfortunately, there is no way to know whether extra security will be required until after the new checkouts are installed.The Market: Isoville has 12,000 households, each of which purchases 1 basket of groceries per…Consider two product designers compete where to place their product in the product space. Assume the product space is the interval from 0 to 1, including the end points. The prices of the product are fixed. Product designers place their product simultaneously in the product space. Consumer’s ideal product is spread out uniformly over the product space. Consumers like to choose their ideal product. If they cannot get their ideal product, they incur a disutility that depends linearly on the distance from their ideal product. (The disutility only depends linearly on the distance from their ideal product.) Each consumer has enough income to buy one product even if the distance from their own ideal product is 1. a. Where will the two products be placed in the Nash equilibrium if the locations of the product in the product space are chosen simultaneously? Explain. b. What are the socially optimal locations, i.e. the best locations from society’s point of view that minimise transportation…You have just been elected governor of a medium-sized U.S. state. Citizens want you to take bold action to reduce greenhouse gas emissions— but they do not want prices of gasoline or electricity to rise. Industries in your state are wary of emissions reductions being required of them but are willing to explore ideas with you. The state legislature will support your efforts as long as you remain popular with voters. The state to your west has just passed ambitious legislation mandating steep emissions cuts. The state to your east has joined a regional emissions trading consortium. The state to your north has just established a revenue-neutral carbon tax. What actions will you take in your first year as governor, and why? What effects would you expect each action to have?
- Which of the following describes features on the equilibrium outcome resulting from a decision. Pick all that apply. Multiple answers: Multiple answers are accepted for this question Select one or more answers and submit. For keyboard navigation. SHOW MORE V It is the result of the decision maker maximizing her objective subject to constraints. It is an exogenous variable. It's value depends on the values of the exogenous variables in the decision process. It's value depends on the values of the endogenous varlables in the decision process.P(Q) (or MSB) = 50 - 0.5Q Р(О) (MPC) %3 25 + 0.5Q МЕС - 0.5Q Рс (Соmpetitive Equilibrium Price) %3 37.50 Qc (Competitive Equilibrium Quantity) = 25 Pe (Efficient Equilibrium Price) = 41.67 Qe (Efficient Equilibrium Quantity) = 16.66 1) Sketch the curves for these functions and illustrate the competitive equilibrium and label Pc and Qc and efficient equilibrium (labelling Pɛ and QE). 2) On the diagram from part 1, illustrate the areas that correspond to the loss in profit for the firm, the total gain to society and the net gain to society when comparing the competitive equilibrium to the efficient equilibrium