Economists assume that consumers attempt to maximize their utility based upon their preferences,inco… Show more Economists assume that consumers attempt to maximize their utility based upon their preferences,income and price of commodities.do you see any weakness of the above?are you aware of any example of irrational behavior by consumers(or yourself )? • Show less

1.Which of the following is a rate that should theoretically serve as a floor for the Fed funds rate

If a monopolistic firm (price searcher) can sell 9 units at a price of $100 each but must reduce its… Show more If a monopolistic firm (price searcher) can sell 9 units at a price of $100 each but must reduce its price to $80 in order to sell 10 units, then A Demand is inelastic and marginal revenue is negative B Marginal revenue is falling but is above price C Demand is elastic and marginal revenue is positive D $100 is the optimal price • Show less

During 2009, the demand for LCD televisions appeared to be falling. At the same time, some industry… Show more During 2009, the demand for LCD televisions appeared to be falling. At the same time, some industry observers expected that several smaller television manufacturers might exit the market. Use a demand-and-supply graph to analyze the effects of these factors on the equilibrium price and quantity of LCD televisions. Clearly show on your graph the old equilibrium price and quantity and the new equilibrium price and quantity. What would a price ceiling set below the resulting equilibrium cause in the market. Explain. • Show less

During the last year, the demand for books has been falling. At the same time, some industry observe… Show more During the last year, the demand for books has been falling. At the same time, some industry observers expected that several smaller book manufacturers might exit the market due to the strong competition imposed by Kindle. Use a demand and supply graph to analyze the effects of these factors on the equilibrium price and quantity of books. Clearly show on your graph the old equilibrium price and quantity and the new equilibrium price and quantity. Can you tell for certain whether the new equilibrium price will be higher or lower than the old equilibrium price? Briefly explain. • Show less

When entrepreneurs are investing their own money, how do they decide which projects they should unde… Show more When entrepreneurs are investing their own money, how do they decide which projects they should undertake? When political decision-makers allocate the funds of others (taxpayers), how do they decide which projects to support? Explain. • Show less

Waiting in line. Two hundred people are willing to wait in line to see a movie at a theater whose ca… Show more Waiting in line. Two hundred people are willing to wait in line to see a movie at a theater whose capacity is one hundred. Denote person i’s valuation of the movie in excess of the price of admission, expressed in terms of the amount of time she is willing to wait, by vi . That is, person i’s payoff if she waits to ti units of time is vi −ti . Each person attaches no value to a second ticket, and cannot buy tickets for other people. Assume v1 > v2 > · · · > v200. Each person chooses an arrival time. If several people arrive at the same time, then their order in line is determined by their index with lower numbered people going first. If a person arrives to find 100 or more people in line, her payoff is zero. Model the situation as a variant of a discriminatory multi-unit auction, in which each person submits a bid for only one unit, and find its Nash equilibrium.1 (a) What would a supply and demand analysis suggest? (b) Will at least 100 people wait in line? (c) Will the highest value people wait in line? I.e., will anyone with an index greater than 100 see the movie? (d) Will people choose to wait different amounts of time? (e) Will anyone that sees the movie wait more than v100? (f) Will anyone that sees the movie wait less than v101? • Show less

Suppose the U.S. president is attempting to decide whether the federal government should spend more… Show more Suppose the U.S. president is attempting to decide whether the federal government should spend more on research to find a cure for lung cancer. He asks you, one of his economic advisors, to prepare a report discussing the relevant factors he should consider. Use the concepts of opportunity cost and trade-offs to discuss some of the main issues you would deal with in your report. Relate your report to three of the principles of economics. • Show less

Refer to Table 4.1. If the six people listed in the table are the only consumers in the market and t… Show more Refer to Table 4.1. If the six people listed in the table are the only consumers in the market and the equilibrium price is $11 (not the $8 shown), how much consumer surplus will the market generate? • Show less

C. T… Show more If demand of a commodity increases with income, A. The good is inferior. B. The good is normal. C. The good has no substitutes. D. The good has no complements. • Show less