Economics (MindTap Course List)
Economics (MindTap Course List)
13th Edition
ISBN: 9781337617383
Author: Roger A. Arnold
Publisher: Cengage Learning
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Chapter 19, Problem 14QP
To determine

The impact of decrease in the price elasticity of demand on the tax paid by the buyers.

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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.
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