MICROECONOMICS-ACCESS CARD <CUSTOM>
11th Edition
ISBN: 9781266285097
Author: Colander
Publisher: MCG CUSTOM
expand_more
expand_more
format_list_bulleted
Question
Chapter 1, Problem 13QE
(a)
To determine
Explain who benefits from the deal.
(b)
To determine
Explain who hurt in this situation.
(c)
To determine
Explain whether a society should allow such market transactions or not.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
2. Consider a world of two countries: Highland (H) and Lowland (L). Each country has an
average output of 9 and desires to smooth consumption. All income takes the form of capital
income and is fully consumed each period. Initially, there are two states of the world: Pandemic
(P) and Flood (F) each occurring with 50% probability. Pandemic affects Highland and lowers
the output there to 8, leaving Lowland unaffected with an output of 10. Flood affects Lowland
and lowers the output there to 8, leaving Highland unaffected with an output of 10.
a. Assume that households in each country own the entire capital stock of their own land. Fill
in the numbers on the following table.
Pandemic
Highland's income
Lowland's income
Flood
Variation about the mean
b. Assume that each country owns 50% of the other country's capital. Fill in the numbers on
the following table.
Pandemic
Flood
Variation about the mean
Highland's income
Lowland's income
c. Compare your answer to (a) and (b). Does…
3. This question explores IS and FX equilibria in a numerical example.
a. The consumption function is C = 1.5 + 0.8(Y - T). What is the marginal propensity to
consume (MPC)? What is the marginal propensity to save (MPS)?
b. The trade balance is TB = 5 [1-()] -
(0.2(Y-8). What is the marginal propensity to
consume foreign goods (MPCF)? What is the marginal propensity to consume home
goods(MPCH)?
c. The investment function is I = 3 - 10i. What is investment when the interest rate is equal
to 0.10=10%.
d. Assume government spending is G. Add up the four components of demand and write down
the expression for D. Make sure that you simplify the equation.
e. Derive the equation for the good market equilibrium using Y = D.
1. A firm has the following demand function: P = 60 – 0.5Q and its total cost is defined by TC= 13+ Qa. Find the maximum revenue b. Find the production to optimize the profit. c. Verify if the marginal revenue and marginal cost are the same at the profit-maximizing productionlevel. Exercise 6From the point of view of the firm, what decision criteria have been found relevant in the analysis ofproduction and profit? Provide two refernces with your answer.
Chapter 1 Solutions
MICROECONOMICS-ACCESS CARD <CUSTOM>
Ch. 1.1 - Prob. 1LOCh. 1.1 - Prob. 1QCh. 1.1 - Prob. 2QCh. 1.1 - Prob. 3QCh. 1.1 - Prob. 4QCh. 1.1 - Prob. 5QCh. 1.1 - Prob. 6QCh. 1.1 - Prob. 7QCh. 1.1 - Prob. 8QCh. 1.1 - Prob. 9Q
Ch. 1.1 - Prob. 10QCh. 1 - Prob. 1QECh. 1 - Prob. 2QECh. 1 - Prob. 3QECh. 1 - Prob. 4QECh. 1 - Prob. 5QECh. 1 - Prob. 6QECh. 1 - Prob. 7QECh. 1 - Prob. 8QECh. 1 - Prob. 9QECh. 1 - Prob. 10QECh. 1 - Prob. 11QECh. 1 - Prob. 12QECh. 1 - Prob. 13QECh. 1 - Prob. 14QECh. 1 - Prob. 15QECh. 1 - Prob. 16QECh. 1 - Prob. 17QECh. 1 - Prob. 18QECh. 1 - Prob. 1QAPCh. 1 - Prob. 2QAPCh. 1 - Prob. 3QAPCh. 1 - Prob. 4QAPCh. 1 - Prob. 5QAPCh. 1 - Prob. 6QAPCh. 1 - Prob. 1IPCh. 1 - Prob. 2IPCh. 1 - Prob. 3IPCh. 1 - Prob. 4IPCh. 1 - Prob. 5IPCh. 1 - Prob. 6IPCh. 1 - Prob. 7IPCh. 1 - Prob. 8IPCh. 1 - Prob. 9IPCh. 1 - Prob. 10IPCh. 1 - Prob. 11IPCh. 1 - Prob. 12IPCh. 1 - Prob. 13IP
Knowledge Booster
Similar questions
- 5. Some people find options expensive and use more complex structures to reduce the cost. For example, consider buying a call with a strike of $55 and selling a call with a strike of $60. a. What is the cost of establishing this combined position? b. What is the payoff of the combined position if the market price goes to $60? c. What is the payoff of the combined position if the market price goes to $100?arrow_forward3. An investor has $1,000 to invest. They believe the price of the underlier will increase to $60 within one year. a. How many shares of stock could they buy with the $1,000 at the current price of $50, and how much would they make if the share price increased to $60? b. How many calls with a strike of $55 could they buy for the same $1,000, and how much would they make if the share price increased to $60? c. How much would they make (or lose) from the stock and from the calls if the share price declined to $40? 4. What is the premium on a call with a strike of $0.01? Why is the premium so close to the $50 share price?arrow_forward1. We want to examine the comparative statics of the Black Scholes model. Complete the following table using the Excel model from class or another of your choice. Provide the call premium and the put premium for each scenario. Underlier Risk-free Scenario price rate Volatility Time to expiration Strike Call premium Put premium Baseline $50 5% 25% 1 year $55 Higher strike $50 5% 25% 1 year $60 Higher volatility $50 5% 40% 1 year $55 Higher risk free $50 8% 25% 1 year $55 More time $50 5% 25% 2 years $55 2. Look at the baseline scenario. a. What is the probability that the call is exercised in the baseline scenario? b. What is the probability that the put is exercised? c. Explain why the probabilities sum to 1.arrow_forward
- Some people say that since inflation can be reduced in the long run without an increase in unemployment, we should reduce inflation to zero. Others believe that a steady rate of inflation at, say, 3 percent, should be our goal. What are the pros and cons of these two arguments? What, in your opinion, are good long-run goals for reducing inflation and unemployment?arrow_forwardExplain in words how investment multiplier and the interest sensitivity of aggregate demand affect the slope of the IS curve. Explain in words how and why the income and interest sensitivities of the demand for real balances affect the slope of the LM curve. According to the IS–LM model, what happens to the interest rate, income, consumption, and investment under the following circumstances?a. The central bank increases the money supply.b. The government increases government purchases.c. The government increases taxes.arrow_forwardSuppose that a person’s wealth is $50,000 and that her yearlyincome is $60,000. Also suppose that her money demand functionis given by Md = $Y10.35 - i2Derive the demand for bonds. Suppose the interest rate increases by 10 percentage points. What is the effect on her demand for bonds?b. What are the effects of an increase in income on her demand for money and her demand for bonds? Explain in wordsarrow_forward
- Imagine you are a world leader and you just viewed this presentation as part of the United Nations Sustainable Development Goal Meeting. Summarize your findings https://www.youtube.com/watch?v=v7WUpgPZzpIarrow_forwardPlease draw a standard Commercial Bank Balance Sheet and briefly explain each of the main components.arrow_forwardPlease draw the Federal Reserve System’s Balance Sheet and briefly explain each of the main components.arrow_forward
- 19. In a paragraph, no bullet, points please answer the question and follow the instructions. Give only the solution: Use the Feynman technique throughout. Assume that you’re explaining the answer to someone who doesn’t know the topic at all. How does the Federal Reserve currently get the federal funds rate where they want it to be?arrow_forward18. In a paragraph, no bullet, points please answer the question and follow the instructions. Give only the solution: Use the Feynman technique throughout. Assume that you’re explaining the answer to someone who doesn’t know the topic at all. Carefully compare and contrast fiscal policy and monetary policy.arrow_forward15. In a paragraph, no bullet, points please answer the question and follow the instructions. Give only the solution: Use the Feynman technique throughout. Assume that you’re explaining the answer to someone who doesn’t know the topic at all. What are the common arguments for and against high levels of federal debt?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Exploring EconomicsEconomicsISBN:9781544336329Author:Robert L. SextonPublisher:SAGE Publications, Inc
Microeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506893Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...EconomicsISBN:9781305506725Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Exploring Economics
Economics
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:SAGE Publications, Inc
Microeconomics: Private and Public Choice (MindTa...
Economics
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...
Economics
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning