Exploring Macroeconomics
8th Edition
ISBN: 9781544363332
Author: Robert L. Sexton
Publisher: Sage Publications
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Chapter 1, Problem 8P
To determine
(a)
The kind of statement (normative/ positive or both) it is-higher tax rate would generate increased tax revenues and those extra tax revenues should be used to give more government aid to the poor.
To determine
(b)
The kind of statement (normative/ positive or both) it is-the study of physics is more valuable than the study of sociology, but both should be studied by all college students.
To determine
(c)
The kind of statement (normative/ positive or both) it is-the increase in the
To determine
(d)
The kind of statement (normative/ positive or both) it is-A decrease in price of butter will increase the amount of butter purchased, but that would be bad because it would increase American's cholesterol levels.
To determine
(e)
The kind of statement (normative/ positive or both) it is-The birth rate is reduced as economies urbanize, but it also leads to a decreased average age of developing countries' population.
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Question 6 of 18
>
The graph shows the average total cost (ATC) curve, the
marginal cost (MC) curve, the average variable cost (AVC)
curve, and the marginal revenue (MR) curve (which is also
the market price) for a perfectly competitive firm that
produces terrible towels. Answer the three questions,
assuming that the firm is profit-maximizing and does not shut
down in the short run.
What is the firm's total revenue?
S
What is the firm's total cost?
$
What is the firm's profit? (Enter a negative number for a loss.)
$
Price
$320
$300
$200
$150
205 260
336
365
Quantity
MC
ATC
AVC
MR=P
1. Suppose that the two nations face the following benefits of pollution, B, and costs of
abatement, C: BN = 10, Bs = 7; CN = 5, Cs = 4. Further assume that if the nation chooses to
abate pollution, it still receives the benefits of pollution but now must pay the cost of
abatement as well.
a. Identify the payoffs that accrue to each nation under the four different possible
outcomes of the game and present these payoffs in the normal form of the game.
b. Recall that the term dominant strategy defines the condition that a player in a game
would prefer to play that strategy (in this case either pollute or abate) regardless of
the strategy chosen by the other player in the game. Does either nation have a
dominant strategy in this game? If so, what is it?
c. Identify the Nash equilibria, or non-cooperative equilibria, of this game.
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