The expected future marginal product of capital (in terms of dollars) for each level of capital.

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Answer 1

Question

Chapter 4, Problem 2NP

a)

To determine

The expected future marginal product of capital (in terms of dollars) for each level of capital.

b)

To determine

The user cost of capital and the desired number of fabricators.

c)

To determine

The user cost of capital and the desired number of fabricators, when rate of interest decreases from 12% to 8%.

d)

To determine

The user cost of capital and the desired number of fabricators, when 40% of tax on company’s sales revenues are applicable.

e)

To determine

The number of fabricators purchased by company when a technical innovation doubles the productivity.

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3. Consider a course allocation problem with strict and non-responsive preferences. Isthere a mechanism that is efficient and strategy-proof? If so, state the mechanismand show that it satisfies efficiency and strategyproofness. {hint serial dictatorship and show using example}4. Consider a course allocation problem with responsive preferences and at least 3students. Is there a mechanism that is efficient and strategy-proof that is not theSerial Dictatorship? If so, state the mechanism and show that it satisfies efficiencyand strategyproofness.5. Suggest a mechanism for allocating students to courses in a situation where preferences are non-responsive, and study its properties (efficiency and strategyproofness). Please be creative

3. Consider a course allocation problem with strict and non-responsive preferences. Isthere a mechanism that is efficient and strategy-proof? If so, state the mechanismand show that it satisfies efficiency and strategyproofness. {hint serial dictatorship}4. Consider a course allocation problem with responsive preferences and at least 3students. Is there a mechanism that is efficient and strategy-proof that is not theSerial Dictatorship? If so, state the mechanism and show that it satisfies efficiencyand strategyproofness.5. Suggest a mechanism for allocating students to courses in a situation where preferences are non-responsive, and study its properties (efficiency and strategyproofness). Please be creative

2. a) Consider a market where one firm (firm 1) currently produces, but a second firm (firm 2) is intending to enter and sell an identical product. The market has inverse demand given by p = 40 – Q, where Q is the total output sold in the market. Firm 1 has a marginal cost of 16 and firm 2 has a marginal cost of c < 16, with no fixed cost for either firm. Firm 2 has a choice of competing on price or quantity, with firms making their choices simultaneously (i.e. the market will be either a Bertrand or Cournot duopoly). If you were advising firm 2 on entering this market, how would you advise it to compete? To what extent would the size of firm 2’s cost advantage affect your advice? b) Now assume that firm 2 is aware that other firms are considering entering the market, so the market may over time change from a duopoly to an oligopoly with more than two firms. This would not change the nature of competition (i.e. any additional firms would set price or quantity in line with the first…

Answer 2

Question

Chapter 4, Problem 2NP

a)

To determine

The expected future marginal product of capital (in terms of dollars) for each level of capital.

b)

To determine

The user cost of capital and the desired number of fabricators.

c)

To determine

The user cost of capital and the desired number of fabricators, when rate of interest decreases from 12% to 8%.

d)

To determine

The user cost of capital and the desired number of fabricators, when 40% of tax on company’s sales revenues are applicable.

e)

To determine

The number of fabricators purchased by company when a technical innovation doubles the productivity.

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Answer 3

Question

Chapter 4, Problem 2NP

a)

To determine

The expected future marginal product of capital (in terms of dollars) for each level of capital.

b)

To determine

The user cost of capital and the desired number of fabricators.

c)

To determine

The user cost of capital and the desired number of fabricators, when rate of interest decreases from 12% to 8%.

d)

To determine

The user cost of capital and the desired number of fabricators, when 40% of tax on company’s sales revenues are applicable.

e)

To determine

The number of fabricators purchased by company when a technical innovation doubles the productivity.

Expert Solution & Answer

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Answer 4

Question

Chapter 4, Problem 2NP

a)

To determine

The expected future marginal product of capital (in terms of dollars) for each level of capital.

b)

To determine

The user cost of capital and the desired number of fabricators.

c)

To determine

The user cost of capital and the desired number of fabricators, when rate of interest decreases from 12% to 8%.

d)

To determine

The user cost of capital and the desired number of fabricators, when 40% of tax on company’s sales revenues are applicable.

e)

To determine

The number of fabricators purchased by company when a technical innovation doubles the productivity.

Expert Solution & Answer

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Answer 5

Chapter 4, Problem 2NP

a)

To determine

The expected future marginal product of capital (in terms of dollars) for each level of capital.

b)

To determine

The user cost of capital and the desired number of fabricators.

c)

To determine

The user cost of capital and the desired number of fabricators, when rate of interest decreases from 12% to 8%.

d)

To determine

The user cost of capital and the desired number of fabricators, when 40% of tax on company’s sales revenues are applicable.

e)

To determine

The number of fabricators purchased by company when a technical innovation doubles the productivity.

Answer 6

Chapter 4, Problem 2NP

a)

To determine

The expected future marginal product of capital (in terms of dollars) for each level of capital.

Answer 7

Chapter 4, Problem 2NP

a)

To determine

The expected future marginal product of capital (in terms of dollars) for each level of capital.

Answer 8

b)

To determine

The user cost of capital and the desired number of fabricators.

Answer 9

b)

To determine

The user cost of capital and the desired number of fabricators.

Answer 10

c)

To determine

The user cost of capital and the desired number of fabricators, when rate of interest decreases from 12% to 8%.

Answer 11

c)

To determine

The user cost of capital and the desired number of fabricators, when rate of interest decreases from 12% to 8%.

Answer 12

d)

To determine

The user cost of capital and the desired number of fabricators, when 40% of tax on company’s sales revenues are applicable.

Answer 13

d)

To determine

The user cost of capital and the desired number of fabricators, when 40% of tax on company’s sales revenues are applicable.

Answer 14

e)

To determine

The number of fabricators purchased by company when a technical innovation doubles the productivity.

Answer 15

e)

To determine

The number of fabricators purchased by company when a technical innovation doubles the productivity.

Answer 16

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Answer 17

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Answer 18

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Answer 19

Ch. 4 - Prob. 1RQ Ch. 4 - Prob. 2RQ Ch. 4 - Prob. 3RQ Ch. 4 - Prob. 4RQ Ch. 4 - Prob. 5RQ Ch. 4 - Prob. 6RQ Ch. 4 - Prob. 7RQ Ch. 4 - Prob. 8RQ Ch. 4 - Prob. 9RQ Ch. 4 - Prob. 10RQ

The expected future marginal product of capital (in terms of dollars) for each level of capital.

The expected future marginal product of capital (in terms of dollars) for each level of capital.

The user cost of capital and the desired number of fabricators.

The user cost of capital and the desired number of fabricators, when rate of interest decreases from 12% to 8%.

The user cost of capital and the desired number of fabricators, when 40% of tax on company’s sales revenues are applicable.

The number of fabricators purchased by company when a technical innovation doubles the productivity.

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