QUESTION ONE: YOU ARE GIVEN THE FOLLOWING FUNCTIONS THAT PREVAILSIN AN HYPOTHICAL ECONOMY:1. C= 100+.70(Yd).2. lo= 2003. Go= 2504. T= 50+0.10(y).5. Xo=1006. M=120+0.03(Y).Based on the previous data find the following:1- Solve for equilibrium income(output).2- Test and apply equilibrium conditions.3- If potential output is=500 what kind of gap exists or occurs in this economy.4- What is the amount of gap.5- What kind of policy should be conducted to close the gap.6- Use balanced budget multiplier to close the gap.EXPLAIN THE FOLLOWING:

In an economy, equilibrium income (output) is achieved when aggregate demand equals aggregate…

Answered: QUESTION ONE: YOU ARE GIVEN THE…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Illustrate general equilibrium and the Laffer curve in the context of a repre- sentative consumer with a utility function: U(C,1) = In(C) + In(1) that he or she maximises subject to a constraint: C = w(1 – t)(h – 1) + T where w, h, l, C,t and T are wages, hours of time available, leisure, consumption, tax rate, and dividend income. The production function for this economy is given by Y = C + G = A(h – 1)'/2 %3D Assume that h = 1, A = 1 and that the government has a balanced budget. (b) Plot the government tax revenue for 0
8. Consider a general equilibrium model with two commodities. The excess demand functions for the two commodities are: E1 (2P₁)¹ (P₁+2P₂) - 1 E2 == (2P2)¹ (P₁+2P₂) - 2 (a) Is Walras' law satisfied? (b) Are the goods substitutes or complements?
Please refer to the following information to answer the question (in bold) below: • You have $300 allocated for spending on a composite good (Y) and car washes (CW). • The price of the composite good is normalized at $1 (Py= $1). • There are two options for purchasing car washes for your car. o Option 1: Pay per car wash, at $20/wash (Pcw = $20). o Option 2: Buy a 10-car wash value pack for $150. Any additional car wash, beyond the included 10 washes, costs you $20/car wash. Let's say you are setting up your budget constraint under the assumption that you purchase the 10 car wash value pack. Which of the following expressions represents the piece of the budget constraint when CW > 10. Y = 100 - 20CW Y = 150-20CW Y = 350 - 20CW Y = 500-20CW
Q3
Please indicate whether the statement is true, false, or uncertain for each of the following two statements, and explain why. If the statement has two parts, or partly true and partly wrong, explain both. The evaluation of your answer focuses on the quality of your explanation. Given the following information: A fundamental feature of a market economy is that no consumer is forced to buy a specific number of units of a product—each consumer is free to decide not to buy if the consumer thinks that the price is too high. Statement to evaluate: This fundamental feature substantially weakens the economic case for the government to regulate the price charged by a monopoly for its product. [In your answer, assume that there are no externalities from this product, and there is no asymmetric information.]
Note: Dashed drop lines will automatically extend to both axes. OFFEE (Millions of pounds) 32 28 COFFEE (Millions of pounds). 24 20 16 0 32 28 24 20 16 0 PPF 4 12 PPF 0 The following graph shows the same PPF for Sylvania as before, as well as its initial consumption at point A. As you did for Candonia, place a black point (plus symbol) on the following graph to indicate Sylvania's consumption after trade. (?) 4 O True 8 O False Candonia 4 12 20 16 GRAIN (Millions of pounds) 24 Sylvania 12 20 16 GRAIN (Millions of pounds) 28 24 32 28 Consumption After Trade 32 (? + Consumption After Trade True or False: Without engaging in international trade, Candonia and Sylvania would have been able to consume at the after-trade consumption bundles. (Hint: Base this question on the answers you previously entered on this page.)
Derive and plot Madeline's demand curve for Coke if she views Coke and Pepsi as perfect substitutes. (Hint: The quantity of Coke consumed where the budget line hits the Coke axis is Y/Pc, where pc is the price of Coke, pp is the price of Pepsi, and Y is income.) Use the 3-point curved line drawing tool to draw Madeline's demand curve for Coke. To simplify the analysis, assume that if the price of Coke and the price of Pepsi are equal, then Madeline, though indifferent between the two, only consumes Coke. Label this curve 'Demand'. Carefully follow the instructions above, and only draw the required objects. C Price/can of Coke Pp Y Pc Coke, Cans per year
1-a Answer following questions by using the Cobb-Douglas utility function u= xx and assuming that the price of good 1 is pi and good 2 is p2. Assume 00, p2>0, and income I>0.
Q1: Suppose Labor and Capital are substitutes and the price of capital falls. All else equal, we should expect the labor select (supply, demand) Curve shift select ( up to the right, down to the left ) and for equilibrium wages to select (rise, fall) Q2: An individual has a utility function over Leisure and Income such that ?=?1/2?1/2 This individual has a budget constraint ?=?⋅(24−?)+? The best possible wage this individual can earn in the labor market is $2 per hour. This individual is $30 in debt (they have negative non-labor income). If this individual is earning a utility level of 4, which of the following are true? Group of answer choices The worker could be supplying 1 unit of Labor The worker could be earning $10 The worker could be supplying 8 units of labor The worker is maximizing their utility given their budget The worker's Marginal Rate of Substitution at the point where the budget constraint intersects the indifference curve is equal to -2
We took the case of two goods model. Both of the goods are normal. Explain below the Income Consumption Curve (ICC) in your own words?
3. Answer the problem and provide solutions.
case 1,2,3

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