Community Rating Is Not Economically Feasible

Community Rating Is Not Economically Feasible
Community rating or risk equalization system would be regulated to provide equal service to any risk level consumer. Insurance companies will be
forced to under provide at lower costs or provide standard service at rates that are unaffordable for many unless subsidized by government. Lower
risk beneficiaries will have to compensate for higher risk consumers making it financially unviable. These would be issues in a normal competitive
market, however in an ACA application, the concern for market decisions or risk selection is void anyway. So community rating would probably be
appropriate in the type of policy.
2)State and explain whether or not community rating is equitable from the standpoint of both economics and risk – Community ... Show more content
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In the specific case of healthcare and marginal product, this would be the quantity of medical services divided by change in the variable input. With
productivity rising to its optimal level, marginal productivity will then equal average productivity and thus average productivity is maximized. An
example of this would be purchasing units of hospital beds. The more bed in inventory the more production will be realized at a certain point. Then
productivity would be diminished at a rate specified above.
4)Compare the economic efficiency and the equity of financing national health care with a payroll tax vs. an income tax – The choice between taxing
income versus taxing consumption is a key decision in the policy determination. Both payroll tax and income tax are essentially taxation on an
individual's income, as one is shared by the employer. I believe the economic efficiency and equity of financing suggests that the progressive financing
of the health insurance system has limited implications for overall income inequality.
5)Hypothesize about the consequences of medical schools becoming more competitive like business schools and law schools – Medical school students
should be held to a much higher standard of motive than other trades such as law and business. The importance of their future careers and place in the
healthcare industry is of
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Lack Of Marginal Utility Theory
Suppliers might have to do a market research in order to forecast the consumer behaviour. To do this efficiently, firms might use marginal utility theory,
namely principle of diminishing marginal utility together with indifference analysis.
Utility is the satisfaction that people earn from the consumption of a certain quantity of a product (Mankiw and Taylor, 2014). Marginalutility is the
additional satisfaction that customer gains from consuming one extra unit within a given period of time. However, the more of a product a person
consumes, the less additional utility they are able to gain from that extra unit. Understanding this situation, economists come up with indifference
analysis. Indifference analysis shows how consumer chooses the combination between two goods but still obtains the same satisfaction and indifference
curve is the graph which illustrates that combination. It means, at any points on indifference curve, the consumer is indifferent about how to combine
the two goods. Diagrammatically, if a person chooses 6 units of good Y with 2 units of good X, his utility will not be different from choosing 4 units
of Y with 3 units of X, as long as those points are still on the curve.
Most indifference curves have a convex shape and the reason is this. The lower units of good Y, the bigger quantity of good X in order to satisfy the
loss of good Y. Nevertheless, the amount of giving up one of these two good cannot be the same. In other words, if the one of the

Leisure And Leisure Time Vs. Leisure Time
We do not only gain utility from our consumption. We also gain utility from leisure. Leisure time is the time you spend outside of work. In the
similar way of maximizing utility from our purchases, we decide the number of hours of work that will yield us the highest utility, in other words,
that makes us the happiest. People make money by giving up some leisure time. The more leisure hours you sacrifice to go to work, the more
income you earn. Leisure time or activities are contrasted, implicitly or directly, with worktime or productive activities. (Moore and Hedges, 1971)
Leisure time could be used for vacation, resting, playing golf or other activities that we enjoy doing. Thus, economists see leisure as a normal good
that provides us with satisfaction. On the other hand, income generates purchasing power so we can purchase goods and services we desire. In other
words, income gives us satisfaction in an indirect way. As both income and leisure yieldutility, everyone has their own indifference curve between
income and leisure, depending on personal preferences.
An indifference curve is constituted by a set of combinations of income and leisure hours that yield the same level of utility. Indifference curves are
downward sloping and convex to the origin. They are parallel to each other– they do not intersect. The distance between an indifference curve and the
origin indicates the utility level of the individual, as it gets longer, the satisfaction of the individual becomes

Economics Behind the Demand Curve
Supplement to Unit – II
BEHIND THE DEMAND CURVE: THE THEORY OF CONSUMER CHOICE
Here, the purpose is to explain the derivation of the demand function and to provide an understanding of the consumer decision–making process.
Consumer Preferences Individuals make choices based on their personal tastes and preferences. Tastes and preferences are shaped by many factors.
Some of the factors are family environment, physical condition, age, sex, education, religion, and location. In the analysis that follows, tastes and
preferences will be viewed as a given, and discussion will focus on how those tastes and preferences are transformed into consumption decisions.
Bundle B
2 units of X
6 units of Y
Bundle A
5 units of X
2 units of Y In ... Show more content on Helpwriting.net ...
The assumption that individuals are capable of ranking their preferences implies that indifference curves exist. The assumption of non–satiation assures
that the curves will have a negative slope. This is easily shown by considering a curve with positive slope, such as the curve passing through point S in
Figure – 2. Pick any point on the curve, such as R. Note that point S denotes a bundle with more of both goods X and Y than point R. But because of
the non–satiation assumption, having more of both goods implies that S is preferred to R. Thus, the two points cannot be on the same indifference curve
. Hence, indifference curves must be downward sloping. Transitivity and non–satiation guarantee that two indifference curves will not intersect. This
can also be seen from Figure – 2, which shows two indifference curves crossing at point J. Consider points K and L. The bundle denoted by K has
more of both goods than L and hence must be preferred to L. Because J and L are on the same indifference curve, transitivity requires that K be
preferred to J. But this is not true; J and K are on the same indifference curve. Thus the assumption of transitivity has been violated because preferences
are not consistent. The assumption of transitivity is always violated when indifference curves intersect. The assumption that consumers will be willing
to give up successively fewer units of one good in

9422 Plus Answes
1.In a competitive industry, suppose the marginal revenue product (MRP) of the last doughnut baker hired is $35, the MRP of the last bagel baker
hired is $15, and a bakery must pay doughnut bakers $40 a day and bagel bakers $10 per day. To maximize profits the bakery should hire: A)more
doughnut bakers and less bagel bakers. B)less doughnut bakers and more bagel bakers. C)less of both doughnut bakers and bagel bakers. D)more of
both doughnut bakers and bagel bakers. Answer: B 2.If two inputs are complementary an increase in the price of one input will: A)decrease the demand
for the other input. B)increase the demand for the other input. C)increase the quantity demanded for the other input. D)have no effect on... Show more
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A)Mail–order catalog sales rise, thus increasing the demand for workers in the mail–order business. B)Sport utility vehicles increase in popularity, thus
increasing the demand for the workers who make them. C)A decrease in the price of lumber decreases the cost of building homes, thus increasing the
demand for construction workers. D)A technological change increases output per worker in the computer industry, thus increasing the demand for
computer workers. Answer: D 15.A merger between one firm and another firm that is its supplier is known as a: A)horizontal merger. C)conglomerate
merger. B)vertical merger. D)parallel merger. Answer: B Use the following to answer questions 16
–17: It is the custom for paper mills located
alongside the Layzee River to discharge waste products into the river. Operators of hydroelectric generating plants on the river find that they must
clean up the river's water before it flows through their equipment. 16.The above situation is an example of: A)an external economy. C)the exclusion
principle. B)a spillover cost. D)a spillover benefit. Answer: B 17.Which of the following would be most appropriate for dealing with this problem?
A)Levy a tax on the consumers of paper products and use the tax revenues to conduct research on new energy sources. B)Levy a tax on the consumers
of electricity and use the tax revenues to subsidize the consumers

Econ 4531 Prob 2 solutions
Homework #2 – Solutions 1. Union A wants to represent workers in a firm that would hire 20,000 workers if the wage rate is $12 and would hire
10,000 workers if the wage rate is $15. Union B wants to represent workers in a firm that would hire 30,000 workers if the wage is $20 and would hire
33,000 workers if the wage is $15. Which union is likely to organize? The union will be more likely to attract the workers' support when the elasticity
of labor demand (in absolute value) is small. The elasticity of labor demand facing union A is given by: пЃЁA пЂЅ %пЃ„E (20,000 пЂ 10,000)
20,000 пЂЅ пЂЅ пЂ2 . %пЃ„w (12 пЂ 15) 12 The elasticity of labor demand facing union B is given by: пЃЁB пЂЅ %пЃ„E (33,000 пЂ 30,000)
33,000 пЂЅ п‚» пЂ0.45 %пЃ„w (15 пЂ 20) 15 Union B,... Show more content on Helpwriting.net ...
Likewise, education and healthcare do not face strong competition from substitute goods. Finally, the production processes for education and
healthcare both require teachers and nurses. And though these talents can be substituted for to some degree by other forms of labor or capital,
both are crucial to the production process. Thus, other inputs (computers, doctors, etc.) cannot readily replace teaching or nursing services, and
therefore the supply elasticity of other factors of production is not very elastic for teachers or nurses. For all three of these rules, therefore, the
labor demand for public school teachers is likely similar to the labor demand for nurses. These two occupations, however, differ in Marshall's
fourth rule. Public school teacher salaries are estimated to be between 50% and 80% of all expenditures on primary and secondary education. In
contrast, expenditures on nursing are a much lower percentage of the total cost of heath care. For this rule, therefore, the demand for nurses is more
inelastic than is the demand for public school teachers. 6. Suppose the value of the marginal product of labor and the value of the average product of
labor are equal when the wage is $15 and the number of workers hired is 20. (a) Plot the VMPe and VAPe curves, illustrating the intersection point
given in the problem. (b) How many workers should the firm hire if the market wage falls to

Consumer Theory and Budget Line
Exam Name___________________________________ MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers
the question. 1) Guy has an income (Y) of $50 with which he can purchase DVDs (D) at $10 each and haircuts (H) at $20 each. Which one of the
following represents Guy 's budget line? A) 50 = 10QD + 20Q H B) 50 = QD + QH C) 20Y = QD + 10Q H D) Y = 10QD– 20Q H E) Y = 50 + QD +
QH 1) 2) David has an income of $30 to buy movie tickets and bus tickets. The price of a movie ticket is $6 and the price of a bus ticket is $2. What is
David 's real income? A) $38 B) $30 C) $32 D) 5 movie tickets or 15 bus tickets E) 15 movie tickets or 5 bus tickets 2) 3) The magnitude of the slope
of the... Show more content on Helpwriting.net ...
A) The income effect dominates the substitution effect. B) As income increases, consumption decreases. C) The income effect reinforces the
substitution effect. D) As price falls, we cannot tell whether consumption increases or decreases. E) As income increases, consumption remains
constant. 13) 14) What is a distinguishing characteristic of an inferior good? A) a negative price effect B) a negative income effect C) a positive
income effect D) an upward–sloping demand curve E) a positive substitution effect 14) 15) The substitution effect is the effect of A) a change in
income on the quantity bought when the consumer moves to a higher indifference curve. B) a change in the best affordable point. C) a change in
price on the quantity bought when the consumer hypothetically remains on the same indifference curve. D) a change in income on the quantity
bought. E) a change in price on the quantity bought when the consumer moves to a higher indifference curve. 15) 4 16) Which one of the following
statements is always true of the substitution effect? A) It is negative. B) It leads to a positive income effect. C) It decreases consumption. D) It leads
to a negative income effect. E) It is positive. 16) 17) If the price of a normal good rises, the income effect A) will decrease consumption of the good
and the substitution effect will increase consumption. B) will increase consumption of the good and the

The Consumption Of Two Goods
consumption of two goods
In economics a consumer is described as a rational individual who wishes to maximise their utility by making rational choices. These choices appear
when a consumer is exposed to two goods, where a given amount of one good substitutes the use of another one. To calculate how a consumer can
achieve the optimal allocation of the two goods, an indifference curve is used and the analysis of an indifference curve can be combined with the budget
constraint. For the consumer, some combinations are better than others for maximising utility, and the best combination is the optimal combination.
Consumers have preferences about the goods they consume. Therefore, when faced with a choice of goods, the consumer must decide ... Show more
Consumers wish to have a higher number of goods than less. If the consumer added another book to his bundle, he would have to sacrifice some water,
in order to hold utility constant. One can calculate how many glasses of water the consumer is willing to sacrifice for another book without changing
his total utility through the marginal rate of substitution. According to (BEGG et al., Economics, 11th edition, McGraw–Hill Education, 2014 ), the
marginal rate of substitution between two goods measures the quantity of a good the consumer must sacrifice to increase the quantity of the other
good by one unit without changing total utility. For example, if the consumer has 10 books and no water and he reads 9 of these books, he won't
enjoy the last one as much. Furthermore, by drinking no water the consumer will be very dehydrated and won't enjoy reading at all, and so the
utility of this particular bundle would be extremely low. On the flip side, if the consumer drank a large amount of water and read few books. As a
result, he would be reluctant to sacrifice his books for even more water. By and large, a consumer's preferences exhibit the diminishing marginal rate of
substitution, which means that when a consumer owns lot of one good, they will give up a comparatively large amount of it to get another good of
which they have little. We use indifference curves to portray our hypotheses

Elasticity of Labour Demand Essay example
Elasticity of Labour Demand Labour is a derived demand realised by the demand for the product that the labour will be producing. The theory of
'labour demand' explains the behaviour of the firm with the key principle being to achieve the optimal amounts of labour employers will want to utilise
at different wage levels. We must make several assumptions when describing how the long run labour demand is derived. Firstly we must assume that
firms are profit maximisers and therefore will attempt always to minimise any costs incurred. Further assumptions to simplify analysis of labour
demand are that there are no costs of employment other than hourly wages and productivity of labour is independent of time worked. I.e. Labour is
homogenous.... Show more content on Helpwriting.net ...
If this equation was rewritten, the slope of the isoquant would be found. The slope of the isoquant can be formulated by the marginal rate of technical
substitution. (вЂ K/ вЂ L) = – (MPL /MPK) As previously mentioned, a profit maximising firm will always wish to minimise costs. A budget
constraint will signify the fixed sum that a firm can spend on inputs. It is the financial constraint of a firm. Capital can be given a charge of r (per
unit bought) and labour can be given a price, w (wage rate per hour). Cost of Production = wL + rK If a firm were to spend its' total budget on capital,
it could purchase C/r, and similarly, to spend all its funds on labour, C/w could be hired. The slope of the firmsГ‚' financial constraint, or isocost, will
hence be –w/r, and all other points along the line show the various purchases they could make of the inputs. Criteria: В· An isocost line will give
combinations that are equally costly В· A higher isocost line is associated with a larger budget В· The slope is linear and is the negative of the ratio
of input prices (–w/r) Diagram Isocost 'Long run choice of inputs' The long run labour demand curve is derived from the isocost–isoquant analysis. The
point where the isocost is tangential to the isoquant is where the maximum output is

Pure Competition
ANSWERS TO END–OF–CHAPTER QUESTIONS 3,4, 7 AND 8 WERE HOMEWORK QUESTIONS 122(Key Question) Complete the following
labor demand table for a firm that is hiring labor competitively and selling its product in a competitive market. | | | | | | Unitsoflabor| Totalproduct|
Marginalproduct| Productprice| Totalrevenue| Marginalrevenueproduct| | | | | | | | | | | | | | | | | | | | | 0123456| 0173143536065| |
____________________________| $2222222| | $____________________________| | $________________________| | a.How many workers will the
firm hire if the going wage rate is $27.95? $19.95? Explain why the firm will not hire a larger or smaller number of units of labor at each... Show more
(b)Output is 142 (= 96 from capital + 46 from labor). Economic profit is $114 (= $142 – $28). Yes, least–cost production is part of maximizing profits.
The profit–maximizing rule includes the least–cost rule. 127(Key Question) In each of the following four cases, MRPL and MRPC refer to the
marginal revenue products of labor and capital, respectively, and PL and PC refer to their prices. Indicate in each case whether the conditions are
consistent with maximum profits for the firm. If not, state which resource(s) should be used in larger amounts and which resource(s) should be used in
smaller amounts. a.b.c.d.(a)Use more of both; (b)Use less labor and more capital; (c)Maximum profits obtained; (d)Use less of both. 12–8Florida
citrus growers say that the recent crackdown on illegal immigration is increasing the market wage rates necessary to get their oranges picked. Some are
turning to $100,000 to $300,000 mechanical harvesters known as "trunk, shake, and catch" pickers, which vigorously shake oranges from trees. If
widely adopted, what will be the effect on the demand for human orange pickers? What does that imply about the relative strengths of the substitution
and output effects? The effect of the adoption of the mechanical pickers will be to decrease the demand for human pickers. If this occurs, the substitution

Supply Curve Between Price And Quantity
A market is a physical place where buyers and sellers come together in one place to transact with each other. The demand curve shows the relation
between price and quantity demanded other things equal. The supply curve shows the relation between price and quantity supplied other things equal.
Where these meet is the equilibrium. This is the output where firms should produce. A need is a necessity, something you can 't do without. A good
example is food. If you don 't eat, you won 't survive for long. The market is mankind 's most valuable tool for meeting the needs of the people
because only a market understands the needs and wants of customers, and how these differ. They also understand the buying behaviour of customers
(why, what and how they buy) and the nature of demand in the market (how are prices set & the factors that influence the quantity of demand) A very
good example for markets meeting mankind's needs is the electronic market. They provide an easier way for start–ups to enter a national market,
particularly if the business has identified a small niche segment of that market. They tend to be highly price–competitive since it is quite easy for
customers to search for products from a variety of suppliers and to compare the best prices available (just about every consumer goods market has
one or more price comparison website). They also provide things that we didn't even know we needed for example mobile phones. Who knew 30
years ago mobile phones would have been

Assignment Answer
1. (Resource Demand) How do firms and individuals determine if it 's worth it to (a) invest in capital improvements, (b) hire additional workers, or
(c) decide where to work? Briefly explain. Answer – Firms and individuals determine if it's worth it to invest in capital improvements when the
marginal product of capital is more than the interest paid on each unit of capital. Similarly, when the marginal product of labor is more than the
wage rate of each unit of labor, until then the firms and individuals will keep on hiring additional workers. The individual will decide to work till the
point where his wage rate received is more than the tax rate paid. 2. (Shifts of Resource Demand) A local pizzeria hires college students to make... Show
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The supply of labor for such workplace would increase at a given wage rate. 8. (Craft Unions) Both industrial unions and craft unions attempt to raise
their members' wages, but each goes about it differently. Explain the difference in approaches and describe the impact these differences have on excess
quantity of labor supplied. Answer – Craft unions have frequently forced employers to agree to hire only union members, thereby gaining virtually
complete control of the labor supply. Then, by following restrictive membership policies such as limiting the number of new members getting admitted,
they artificially restrict labor supply. Therefore, by excluding workers from union and therefore from the labor supply, crafts union succeed in elevating
wage rates. An industrial union that includes virtually all available workers in its membership can put п¬Ѓrms under great pressure to agree to its wage
demands. Because of its legal right to strike, such a union can threaten to deprive п¬Ѓrms of their entire labour supply, and an actual strike can do just
that. 9. Why do you think the role of the unions in the US has declined over the years? Briefly discuss. Answer – The role of labor unions in the U.S
has declined over the years because of strong government policies, unfavorable working and law environment for labors, increased labor hostility, and
high levels of unfair labor practices. The Taft–Hartley Act of 1947 placed draconian

Difference Between Renewable Resources And Non Energy...
1/ A clear explanation of the difference between renewable resources and non renewable resources
Renewable resources can be used and replaced. Examples are fish stocks, forests, or water. They are resources that will refilled by itself through
reproduction, plantation and by nature cycle. They are natural resources that technically regenerate itselves through ecological process.
Non renewable resources, such as coal, oil, gold and cooper, are land resources which once used will never be replaced. Once they are used, the
quantity of those kinds of resources would be reduced. Scarcity may exist in this situation, Scarcity implies that there are unlimited wants in the world
but with limited resources. For resources like coal, mine, gold ... Show more content on Helpwriting.net ...
Examples of complements are tennis rackets and tennis balls, washing machines and soap powder, DVD disks and DVD recorders. Economics theory
suggests that an increase in the quantity demanded of one complement will lead to an increase in the demand for another, result in an increase in the
price and quantity bought of the other complement. For examples, an increase in supply and the consequent fall in price of I phone 6S will lead to a
rise in the quantity of I phone 6S and a rise in demand of I Watch. Shown in Figure 2a and 2b.
A good is in joint supply with another good when one good is supplied for two different purposes. For instance, oil are supported for by product
like petroleum and Vaseline health product. A cow may give both leather and beef. When two or more goods are produced together, so that a
change in supply of one good will necessarily change the supply of the other goods with which it is in joint supply. Figure 3, shows that an increase
in demand for oil lead an increase in both price and quantity bought and sold of petroleum More oil production will lead, as a by–product to greater
supply of Vaseline. In Figure 4,This is shown in a shift to the right in the supply curve for leather. The price of leather will then fall and quantity
demanded, bought and sold will increase.
(Economics by Alain Anderton P.)
3/ A clear explanation of the difference between income effect and substitution effect of a change in the price of a

Essay on Problem 1
20–1. The campus pizzeria sells a single pizza for $12. If you order a second pizza, however, the pizzeria charges a price of only $5 for the additional
pizza. Explain how an understanding of marginal utility helps to explain the pizzeria's pricing strategy.
20–1–A. The pricing method that the pizzeria is using shows they understand how marginal utility works, specifically diminishing marginal utility.
After hitting the level of satisfaction from the first pizza, a second pizza will not be quite as rewarding. Getting an additional pizza at a price of only
$5 dollars will entice a customer to purchase it because of the lower price. Because the significance of the second pizza is less than the first, a
costumer would spend less on it. ... Show more content on Helpwriting.net ...
a. Which one–unit increase in consumption from one point to the next along the total utility curve generates the highest marginal utility?
From point A to point B there is a total utility increase of 5 units, meaning the marginal utility is 5 units as well. Therefor, point A to point B generates
the highest marginal utility.
b. Which one–unit increase in consumption from one point to the next along the total utility curve generates zero marginal utility?
Point E to point F generates no marginal utility, meaning the marginal utility is zero.
c. Which one–unit increase in consumption from one point to the next along the total utility curve generates negative marginal utility?
Point F to point G decreases total utility from 11 to 10 units meaning marginal utility is negative.
20–10. Draw a marginal utility curve corresponding to the total utility curve depicted in Problem 20–9.
20–12.Refer to the following table for a different consumer, and assume that each week this consumer buys only hot dogs and tickets to baseball
games. The price of a hot dog is $2, and the price of a baseball game is $60. If the consumer's income is $128 per week, what quantity of each item will
he purchase each week at a consumer optimum?
20–12–A. The consumer will purchase 2 baseball game tickets and 4 hot dogs each week at a consumer optimum. Equal marginal utilities per dollar

occur at the consumption level of 2 baseball game tickets and 4 hot dogs, with

What Are The Impact On The Economic Panorama Of The US?
One of the main indicators of the economic panorama of The US It is the several mass dismissals, defined as the several instances where companies
dismiss at least 50 workers. Massive layoffs combine closely with the business cycle. These brief highs and lows show the adjustment of firms to
large single shocks and, in general, are not considered indicators of a systemic increase in unemployment or an indication of a general economic
slowdown. However, a potentially more persistent peak occurred in September 2008, when mass layoffs rose to their highest level since September
11. In fact, October data show that mass layoffs remain near record levels and those mass layoffs in manufacturing even increased in October. This
pattern could show the... Show more content on Helpwriting.net ...
Hence, the income effect will cause people to work less after a wage increase. in general, the change in the unemployment rate varies inversely
with the rate of growth in real GDP: when the rate of real GDP growth is above average, we expect the unemployment rate to fall rapidly. However,
after several quarters of a severe recession, unemployed workers may become discouraged and stop looking for work. Since the definition of
unemployed persons requires that they are looking for work, officially measured unemployment falls as workers become discouraged and stop
looking. We could see an increase in the official unemployment rate after several quarters of strong expansion as existing workers, encouraged by an
increase in wages, leave exist–in jobs to search for new ones and discouraged workers begin to search for jobs again. The unemployment rate rose to
4.7 percent in December, less than half of its maximum during the recession, while the rate of labor participation, which remained unchanged for the
past three years despite the demographic pressure, increased to 62.7 percent. The average hourly earnings for all private workers increased by 2.9
percent during 2016. Strong growth in real wages and strong employment growth have resulted in an increase in real household income, with the
largest gains earmarked for low– and middle–income families.

Financial Markets Test with Multiple Choice Questions
Class Test 1 (Sample Items)
Choose the most correct response. Record your answer on the mark sense sheet provided. Each answer is worth ВЅ mark.
QUESTION 1
All else equal, a binding price floor will cause less of a surplus if:
(a)both supply and demand are inelastic
(b)both supply and demand are elastic
(c)supply is elastic, but demand is inelastic
(d)supply is inelastic, but demand is elastic
QUESTION 2
The figure shows the market for books before and after an excise tax is introduced. The tax on books is ________, buyers pay ______ of tax per book,
and the governments tax revenue is ________ a week.
(a) $0.40 a book; $0.40; $4
(b) $1.20 a book; $0.80; $128
(c) $0.80 a book; $1.20; $12
(d) ... Show more content on Helpwriting.net ...
As we continually increase labour one unit at a time,
(a) the addition to output will become larger, if capital is held constant.
(b) the addition to output will become smaller, if capital is held constant.
(c) larger reductions in capital will be required to keep output constant.

(d) smaller reductions in capital will be required to keep output constant.
(e) larger increases in labour will be required to keep output constant.
QUESTION 11
The least cost technique of producing a given output occurs where the marginal rate of substitution of labour for capital equals the
(a) ratio of the quantity of labour used relative to the quantity of capital used.
(b) ratio of the price of labour to the price of capital.
(c) minimum point on the isoquant line.
(d) marginal cost of capital
(e) ratio of the marginal cost of capital to the marginal cost of labour.
QUESTION 12
A perfectly competitive firm's supply curve is the upward–sloping part of its
(a) average product curve, at all points above the point of minimum average variable cost.
(b) marginal cost curve, at all points above the point of minimum average fixed cost.
(c) marginal revenue curve, at all points above the point of minimum average revenue.
(d) marginal revenue curve, at all points above the point of minimum average total cost.
(e) marginal cost curve, at all points above the point of minimum

The Revealed Preference Theory Approach To Consumer Behavior
3. Revealed Preference Theory 3.1 IntroductionMr. Paul Samuelson introduced the Revealed Preference Theory to explain the consumer behavior. It is
a method of analyzing choices of consumers, mostly used for comparing the influence of policies on consumer behavior. The preferences of consumers
can be revealed by their purchasing habits. Revealed preference theory emerged because existing theories of consumer demand were based on a
diminishing marginal rate of substitution (MRS). This diminishing MRS relied on the assumption that consumers always decide to maximize their
utility. While utility maximization was not a controversial assumption, the underlying utility functions could not be measured with great certainty.
Revealed preference theory... Show more content on Helpwriting.net ...
Impossible to Separate Substitution Effect: Samuelson's Fundamental Theorem is conditional & is not universal. It is based on the law that +ve
income–elasticity implies –ve price elasticity. Because, the price effect consists of the income & substitution effects, it is not possible to ostracize the
substitution effect from the income effect on the level of observation. If the income effect is not positive, then the price elasticity of demand is
indeterminate. On the other part, if the income elasticity of demand is positive, the substitution effect due to a change in price cannot be established.
Thus, the substitution effect cannot be made different from the income effect in the Samuelson

Eco Study Question
The affordable bundle that yields the greatest satisfaction to the consumer is: Answer | | the maximum bundle.| | | the equilibrium consumption
bundle.| | | the allowable purchasing bundle.| | | the most popular bundle.| Given that income is $500 and PX = $20 and PY = $5, what is the market
rate of substitution between goods X and Y? Answer | | 100. | | | 4. | | | –20. | | | 25. | The budget set defines the combinations of good X and Y that
Answer | | are desirable to the consumer.| | | are affordable to the consumer.| | | maximizes consumer 's utility.| | | maximizes supplier 's profit.| The
difference between a price decrease and an increase in income is that Answer... Show more content on Helpwriting.net ...
| Which is the correct statement about the relationship between government and the market? Answer | | Government should intervene on the consumers
' behalf.| | | Government should intervene on the producers ' behalf.| | | Government should not intervene on any party 's behalf.| | | Government often
plays a role in disciplining the market process.| Suppose the long–run average cost curve is U–shaped. When LRAC is in the increasing stage, there
exist Answer | | economies of scope.| | | diseconomies of scope.| | | economies of scale.| | | diseconomies of scale.| Fixed costs exist only in: Answer
| | The long run.| | | Capital intensive markets.| | | The short run.| | | Labor intensive markets.| If the marginal product per dollar spent on capital is
less than the marginal product per dollar spent on labor, then in order to minimize costs the firm should use Answer | | less capital and more labor.|
| | less labor and more capital.| | | less labor and less capital.| | | more labor and more capital.| Suppose the marginal product of labor is 10 and the
marginal product of capital is 8. If the wage rate is $5 and the price of capital is $2, then in order to minimize costs the firm should use Answer | |
more capital and less labor.| | | more labor and less capital.| | | equal amounts of labor and capital.| | | none of the statements associated with this question

Efficiency Gain of International Trade Essay
In evaluating the efficiency gain of international trade, we are concerned about the entire country or community, and thus encounter a more
complicated situation with several individuals making up the entire country. Answer these questions (provide graphs if you want):
What is meant by the community indifference curve?
The community indifference curve shows the various combinations of two commodities which yield the same level of satisfaction or utility to a
community or nation. It is intended to represent the preferences of a country as a whole and is a convenient tool for deriving quantities of trade in a
two–good model. The slope of a curve at any point gives the marginal rate of substitution or the amount of a commodity which a ... Show more content
on Helpwriting.net ...
The shape of the production possibility frontier (PPF) of a country depends on: (1) its factor endowments and (2) the production functions of the various
commodities. The plausible shapes of the production possibility frontier include:
Linear
Suppose there are constant returns to scale in both industries and only one factor, then the production possibility frontier is a straight line. If the
opportunity cost is constant as production of different goods is changing, then a linear PPF is produced.
Concave (towards origin)
Suppose there is diseconomies of scale or decreasing returns to scale. Under full utilization of resources, the production possibility frontier is concave
towards the origin. This shape is basically due to the differences in optimal factor intensities between industries. If a country faces increasing
opportunity costs or marginal rate of transformation (MRT) in producing more units of a commodity, then this is shown by a PPF that is concave. The
country will produce where the MRT is equal to the equilibrium relative commodity price.
Convex (towards origin)
Suppose there is economies of scale or increasing returns to scale. Under full utilization of resources, the production possibility frontier is convex

towards the origin. If there is increasing returns to scale in either or both industries and there is one factor of production then the production set is
non–convex.

Supply and Demand and United States
CHAPTER 2
THE BASICS OF SUPPLY AND DEMAND
1. Consider a competitive market for which the quantities demanded and supplied (per year) at various prices are given as follows:
Price
($ ) Demand Supply (millions) (millions)
60 22 14
80 20 16
100 18 18
120 16 20
a. ... Show more content on Helpwriting.net ...
6. In 1998, Americans smoked 470 billion cigarettes. The average retail price was $2 per pack. Statistical studies have shown that the price elasticity
of demand is –0.4, and the price elasticity of supply is 0.5. Using this information, derive linear demand and supply curves for the cigarette market.
7. In Example 2.7 we examined the effect of a 20 percent decline in copper demand on the price of copper, using the linear supply and demand curves
developed in Section 2.6.
Suppose the long–run price elasticity of copper demand were –0.4 instead of –0.8.
a. Assuming, as before, that the equilibrium price and quantity are P* = 75 cents per pound and Q* = 7.5 million metric tons per year, derive the linear
demand curve consistent with the smaller elasticity.
b. Using this demand curve, recalculate the effect of a 20 percent decline in copper demand on the price of copper.
8. Example 2.8 analyzes the world oil market. Using the data given in that example,
a. Show that the short–run demand and competitive supply curves are indeed given by
D = 24.08 – 0.06P
SC = 11.74 + 0.07P.
b. Show that the long–run demand and competitive supply curves are indeed given by
D = 32.18 – 0.51P
SC = 7.78 + 0.29P.
c. During the late 1990s, Saudi Arabia accounted for 3 billion barrels per year of
OPEC's production. Suppose that war or revolution caused Saudi Arabia to stop producing oil. Use the model above to calculate what would happen

Hw1 Solution Essay
Econ3101 – Section 006 Intermediate Microeconomics
Xavier Vinyals–Mirabent Due: Wednesday, February 1st, 2012.
Solutions to Homework 1.
1
1. A consumer has preferences for two goods. Her preferences satisfy Axioms 1 through 4 as discussed in class. A v D v
10
E v 5 C v
B v
0 0 5 (a) Plot and label the following bundles: A (2,10) B (6,2) C (0,4) D (8,10) E (4,6) (b) Assume A is indiп¬
Ђerent to B (A в€
ј B). On a single line,
list all the bundles in descending order of preference using ( ) to denote strict preference and (в€
ј) to denote indiп¬Ђerence between adjacent pairs. In
other words, use the form: A B C D E Answer: D E Aв€
јB C, or D E Bв€
јA C. 10
2
2. Consider an economic agent who has preferences that are represented ... Show more content on Helpwriting.net ...
Figure 1: Jeremy Bentham 100
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75

50
25
0
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0
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100
Figure 2: John Stuart Mill 100 r r r 75
50
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rr rr
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rr r

0
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50
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100 8
6. I've been told I have odd tastes. I thought about this and realized that: If I have more Y than X, then I always trade 5 Y for one X. If I have more X
than Y, then every time I give up one Y, I require 5 X to remain indiп¬
Ђerent after the exchange.
(a) Plot and label the following bundles and then graph my indiп¬Ђerence curves through each of these points. A = (10,50) B = (50,50) C = (65,5) (b)
Please tell me the value of my: Marginal Rate of Substitution at point A =5 Marginal Rate of Substitution at point C =1/5
100 h hh h h h h hh h h hh h hh h hh h hh h hh h hh h hh h hh h hh h h hr A B r hВ–В– В–В–В– hh В–В–В– В–В–В– hh В–В–В– В– hh hh hh hh hh
hh hh hВ– В– hВ–В– В–В–В– В–В–В– В–В–В– В–В–В– В–В–В– В–В–В– В–В–В– В–В–В– В–В–В– C r В–В–В– В–В–В– В–В–В– В–В–В– В–
В– В–
75
50
25
0
0
25
50
75

100
9
7. Britney S. has a divided mind. Her preferences change drastically according to how much X and

Essay on ECN100 HW2 3
HW 1 (1) Draw an indifference curve map with the quantity of pennies are on the horizontal axis and the quantity of nickels are on the vertical axis.
Given the shape of your indifference curve, how would you describe the typical relationship between these two "products"? The two goods are
perfect substitutes for each other. 5pennies are equivalent to a nickel. (2) You and I are in consumer equilibrium. CDs cost 10 dollars each and
cassette tapes only 2 dollars each. I consume CDs and cassettes. You consume only cassettes. What can you infer about my MRS (marginal rate of
substitution) of CDs and tapes? What about your MRS. Since both individuals are in consumer equilibrium, for you, the MRS should equal the price
ratio since you consume... Show more content on Helpwriting.net ...
With the income effect you consume less of both goods (since real income has decreased). Therefore at the new equilibrium, you consume less of X and
the amount of consumption of Y depends on the relative strength of the two effects. (5) Think of a commercial establishment (department store, coffee
shop, gas station, store from which you make common purchases – that is spending your hard–earned money) and think through the questions in the
previous exercise (4) as they would apply yourself and to the goods offered by this establishment. That is, take any two goods or groups of goods
from the store you have chosen and re–do the questions in (4) as they would really apply to you and your tastes. Now you are thinking economics and
thinking creatively as well! Consider choice made between having fruit beer(X) or having ice cream(Y) after dinnerassuming that both are good
goods. At the equilibrium, the MRS=price ratio = PX/PY. At the equilibrium, the indifference curve is tangential to the budget line. MRS =MUX
/MUY =PX/PY, i.e. MUX/PX = MUY/PY Now it is given that X(fruit beer) is "craved" much more for relative to Y(ice cream). Hence the
indifference curves becomes steeper. That is now you are willing to give up more amount of Y to have a unit more of X. Alternatively, it can be said
that you need more of Y to leave you indifferent for the same decrease in X. Hence the slope of the indifference curve, i.e. the marginal rate of
substitution increases, i.e. MUx/MUY increases.

The Current Economic Arguments And Concerns Around Binge...
Introduction The purpose of the following report is to illustrate the current economic arguments and concerns around binge drinking in Australia. This
is then followed by looking at the method of introducing an 'alcopop' tax aimed at reducing the amount of binge drinking in Australia. The report will
use a large variety of research articles, economic theories and models to report on this issue. The purpose of this economics report is to illustrate the
economic concerns and arguments around smoking in Australia and the methods of taxing aimed at reducing the smoking rate. The report will use a
variety of research articles, economic theories and models to report on this issue so that the CEO of the Cancer Council of Australia has a thorough
understanding. The Issue of Binge Drinking in Today's Society Research has stated that "young adults aged between18–24, attending University and/or
young women are most at risk of being binge drinkers in Australia and 25% of the general population of Australia are at risk of obtaining a drinking
problem." (Davies, O'Hara, Raciti, Reinhard, Sharma, 2012) Today's society is seeing the risks and issues coming from the alcoholic behaviours of
youths in Australia and binge drinking is the biggest problem. Binge drinking can and will lead to rises in health and legal costs because of treatment
for preventable crimes, injuries and diseases caused by the negative effects of alcohol consumption. The cheap cost of alcopops in Australia encourages

Eco 550 Final Exams
1. Which of the following statements concerning the long–run average cost curve of economic theory is true?
Answer
It is L–shaped
It is в€©
–shaped
It is в€
Є–shaped
It is в€§
–shaped
It is M–shaped
2.Economies of scale exist whenever long–run average costs:
Answer
Increase as output is increased
Remain constant as output is increased
Decrease as output is increased
Decline and then rise as output is increased
3.For a short–run cost function which of the following statements is (are) not true?
Answer
The average fixed cost function is monotonically decreasing.

The marginal cost function intersects the average fixed cost function where the average variable cost function is a minimum.
The marginal ... Show more content on Helpwriting.net ...
Answer
ordinary least squares regression on historical data
market experiments, where the price is set differently in two markets
consumer surveys, where potential customers hear about the product and are asked their opinions
double log functional form regression model
19.An example of a time series data set is one for which the:
Answer
data would be collected for a given firm for several consecutive periods (e.g., months). data would be collected for several different firms at a single
point in time.
regression analysis comes from data randomly taken from different points in time.
data is created from a random number generation program.
20.Smoothing techniques are a form of ____ techniques which assume that there is an underlying pattern to be found in the historical values of a
variable that is being forecast.
Answer
opinion polling
barometric forecasting
econometric forecasting
time–series forecasting
21.Generally, investors expect that projects with high expected net present values also will be projects with
Answer

low risk
high risk
certain cash flows
short lives
22.The net present value of an investment represents
Answer
an index of the desirability of the investment
the expected contribution of that

Causes of shifts in labor demand curve
Causes of shifts in labor demand curve The labor demand curve shows the value of the marginal product of labor as a function of quantity of labor
hired. Using this fact, it can be seen that the following changes shift the labor demand curve: The output price. When output price rises, the labor
demand curve shifts to the right { more labor is demanded at each wage. When output price falls, less labor is demanded at each wage. Technological
change causes the MPL function to change, generally to in– crease at each level of L. This shifts the labor demand curve to the right. For instance
between 1960 and 2000 the average hourly output produced by US workers rose by 140 percent. However, it is also possible for technological change...
Show more content on Helpwriting.net ...
The wage falls from W1 to W2. As the wage falls, it becomes protable for rms to hire more workers. As the rm hires more workers, the marginal
product of a worker decreases, so value of marginal product decreases. In the new equilibrium wage equals value of marginal product of labor and
both are lower than before. Example from Israel: How a shift in labor supply changes the equilibrium wages. In the 1980s many Palestinians
commuted from their homes in West Bank or Gaza strip to work in Israel (often in construction, agriculture). In 1988, due to Intifada, Israel
imposed curfews, checked work permits more thoroughly, ban of Palestinians staying overnight in Israel enforced. Number of Palestinians with
jobs in Israel decreased by half. Palestinians who kept jobs in Israel had 50 percent wage increases. With fewer Palestinian workers in Israel, each
worker 's value of marginal product was higher. Shifts in labor demand Suppose apples become more popular ! demand shifts to the right ! price of
apples rises. The marginal product of labor (MPL) has not changed. But value of marginal product of labor (P MPL) has increased. 3 The higher
price of apples makes it protable to hire more apple pickers. Demand for labor shifts to the right. Equilibrium wage rises and equilibrium employment
rises, as in the graph: D1 D2 L1 L2 W1 W2 S Prosperity of rms in an industry often

Econ Bk Sol
| 9 |possibilites, preferences, | | |and choices | Chapter Answers to the Review Quizzes Page 206 1.What does a household's budget line show? The
budget line plots combinations of goods that require all a household's income and describes the limits to its consumption choices. 2.How does the
relative price and a household's real income influence its budget line? The magnitude of the slope of the budget line equals the relative price of the
good or service measured on the horizontal axis. A fall in the price of the good measured on the horizontal (vertical) axis decreases that good's... Show
more content on Helpwriting.net ...
Since the consumer is indifferent among all points on an indifference curve, when moving along it any increase in satisfaction from gaining one
good must be matched by an equal decrease in satisfaction from a loss in the other good. An indifference curve is bowed toward the origin
because the more of good x that is consumed the less you are willing to give up of good y to get more of good x and remain indifferent. 3.What do
we call the magnitude of the slope of an indifference curve? The magnitude of the slope of an indifference curve is called the marginal rate of
substitution (MRS). The MRS measures the rate at which the consumer gives up one good to get more of another good, while remaining on the same
indifference curve (keeping the consumer indifferent about the changes). The ratio of the quantity of one good needed to replace the quantity of the
other good and remain indifferent is the slope of the indifference curve. The bowed–in shape of the indifference curve is due to the assumption of
diminishing MRS. 4.What is the key assumption about a consumer's marginal rate of substitution? The key assumption about the marginal rate of
substitution is that it is diminishing as a consumer moves down an indifference curve, creating the bowed–in shape. Page 214 1.When a consumer
chooses the combination of goods and services to buy, what is she or he trying to achieve? The consumer is trying to achieve the

Micro Economic
1. PRINCIPES OF ECONOMICS–MANKIEW
CHAPTER 1– QUESTION FOR REVIEW (18)
No 3. What is inflation and what causes it? = Inflation is an increase in the overall level of prices in the economy. Inflation happen because culprit is
growth in the quantity o money when a government creates larges quantities of the nation's money, the value of the money.
No 5. Explain the two main causes of market failure and give an example of each! = Externality, is the impact of one person's action on the well
being of a bystander Example: pollution. = Market power, is the ability of a single economic actor (or small group of acors) to have a substantial
influence on market prices. Example : if everyone in town needs water but there is only one well, ... Show more content on Helpwriting.net ...
No. 9. What is a competitive market? Briefly describe a type of market that is not perfectly competitive. = competitive market is a market in which
there are many buyers and many sellers so that each has a negligible impact on the market price. * Monopolistic competition = market characterized
by numerous buyers and relatively numerous sellers trying to differentiate their product from those of competitors. * Oligopoly = market
characterized by a handful of (generally large)sellers with the power to influence the prices of their products. * Monopoly = market in which there is
only one producer that can therefor set the prices of its products 5. PRINCIPLES OF ECONOMICS–MANKIEW
CHAPTER 5–QUESTION OF REVIEW (109)
No. 5. If the elasticity is grearter than 1, is demand elastic or inelastic? If the elasticity equals 0, is demand perfectly elastic or perfectly inelastic? = If
the elasticity is greater than 1, and demand is elastic.if the elasticity yequals 0, demand is perfectly inelastic
No 9. List and explainthe four determinantsof the price elasticity of demand discussed in the chapter. * Availability of close substitutes
Goods with close substitutes tend to have more elastic demand because it is easier for consumer s to switch from that goods to others. * Necessities
versus luxuries
Necessities tend to have inelastic demands,

Eco/561 Week 1
ECO/561 1) If a firm in a purely competitive industry is confronted with an equilibrium price of $5, its marginal revenue: A. will be greater than $5
B. will also be $5 C. will be less than $5 D. may be either greater or less than $5 2) A firm that is motivated by self interest should: A. always use large
amounts of cheap inputs and small amounts of expensive inputs in producing its output B. hire each input so the productivity of each is equal at the
margin C. always use large amounts of the most productive inputs and small amounts of the least productive inputs in producing its output D. employ
the combination of resources that will produce the profit–maximizing output at the minimum cost 3) If... Show more content on Helpwriting.net ...
price exceeds average total cost by the largest amount D. total revenue exceeds total cost by the greatest amount 18) Nonprice competition refers to:
A. reductions in production costs that are not reflected in price reductions B. price increases by a firm that are ignored by its rivals C. advertising,
product promotion, and changes in the real or perceived characteristics of a product D. competition between products of different industries, for
example, competition between aluminum and steel in the manufacture of automobile parts 19) Advertising can impede economic efficiency when it:
A. increases consumer awareness of substitute products B. enables firms to achieve substantial economies of scale C. reduces brand loyalty D.
increases entry barriers 20) Which of the following is not a possible source of natural monopoly? A. rent–seeking behavior B. greater use of specialized
inputs C. simultaneous consumption D. large–scale network effects 21) Suppose that an industry is characterized by a few firms and price leadership.
We would expect that: A. marginal revenue would exceed marginal cost B. price would exceed both marginal cost and average total cost C. price
would equal average total cost D. price would equal marginal cost 22) When economists view technological change as internal to the economy, they
mean that it: A. arises mainly from government

Signing Contracts With Labors Before Expelling Illegal...
Signing contracts with labors before expelling illegal immigrants to save the labor costs. Purchasing forward contract to lock the price of materials in
case of imposing tariff on importation. Taking loan in foreign countries with lower interest rate and purchasing currency future to avoid the exchange
rate fluctuation.
Introduction
As a quickly growing global manufacturing company, we are facing various and potential opportunities and challenges within the global market.
Manufacturing remains a crucial position of accelerating economics in both developing and developed counties. The 2007 financial recession choked
off the demand and numerous workers transferred to service industry. Due to the variable costs and capital loss, the majority of the business are
occupied by the first tier of manufacturing nations. Recently, Donald Trump was elected as the president of the United States. Our society will
encounter some turbulence from different aspects when he executes his proposals. The decisions he made on both financial field and manufacturing
industry will impact our future strategy, so we need to prepare ahead of time to hedge some possible risk.
Employment
Even though accelerating the development of manufacturing plays a significant role in Donald Trump's plan called "make American great again". His
judgements are not wise enough which would drive the situation worse. He proclaimed to expel illegal immigrants because he insisted that decision
will bring jobs back to

Capital as a Factor of Production and the Capital Theory...
1.1. Capital as a factor of production and the capital theory debates
Beginning in the mid–1950s and for the following twenty years or so, a debate concerning the neoclassical treatment of capital turned apparent in the
discipline. This gave rise to a series of exchanges between scholars associated with Cambridge, England, and Cambridge, Massachusetts, (US). This
debate is broadly known in the literature as the 'Cambridge capital theory controversies'.
The relevance of this controversy lies in that the criticisms of neoclassical theory raised by Cambridge (UK) concern both the theoretical illegitimacy
of measuring 'capital' as a single magnitude in value terms to determine prices and distribution, and the foundational premise underlying the dominant
supply and demand approach: the factor substitution principle. In the controversies it has been shown that this principle cannot in general be posited to
explain the distribution of the social product in terms of supply and demand. This result, discovered by means of the analysis of the relation between
prices and distribution in economies with heterogeneous capital goods, has been revealed as theoretically irrefutable, and, as this study will argue,
concerns the hard core of the neoclassical or marginal theory both in its traditional (capital measured in value terms) and in its contemporary
formulations (capital as a set of heterogeneous goods).
Capital as a single magnitude has been the treatment on which, under conditions

Business Economic
1. The theory of consumer choice provides the foundation for understanding a. the structure of a firm. b. the profitability of a firm. c. a firm 's
product demand. d. a firm 's product supply. ANS: C PTS: 1 DIF: 1 REF: 21–0 TOP: Consumer choice MSC: Definitional 2. The theory of consumer
choice examines a. the determination of output in competitive markets. b. the tradeoffs inherent in decisions made by consumers. c. how consumers
select inputs into manufacturing production processes. d. the determination of prices in competitive markets. ANS: B PTS: 1 DIF: 1 REF: 21–0 TOP:
Consumer choice MSC: Definitional 3. Consider two goods, books and hamburgers. The slope of the consumer 's budget constraint is measured by the
a. consumer 's income... Show more content on Helpwriting.net ...
Refer to Figure 21–1. A consumer that chooses to spend all of her income could be at which point(s) on the budget constraint? a. A b. E c. B, C, or D
d. A, B, C, or D ANS: C PTS: 1 DIF: 1 REF: 21–1 TOP: Budget constraint MSC: Applicative 14. Refer to Figure 21–1. All of the points identified in
the figure represent possible consumption options with the exception of a. A b. E c. A and E d. None. All points are possible consumption options.
ANS: B PTS: 1 DIF: 2 REF: 21–1 TOP: Budget constraint MSC: Applicative Figure 21–2 15. Refer to Figure 21–2. Which of the graphs in the figure
reflects a decrease in the price of good X only? a. graph (a) b. graph (b) c. graph (c) d. graph (d) ANS: B PTS: 1 DIF: 2 REF: 21–1 TOP: Budget
constraint MSC: Analytical 16. Refer to Figure 21–2. Which of the graphs in the figure reflects an increase in the price of good Y only? a. graph (a) b.
graph (b) c. graph (c) d. graph (d) ANS: C PTS: 1 DIF: 2 REF: 21–1 TOP: Budget constraint MSC: Analytical 17. Refer to Figure 21–2. Which of the
graphs in the figure could reflect a decrease in the prices of both goods? a. graph (a) b. graph (b) c. graph (c) d. graph (d) ANS: D PTS: 1 DIF: 2 REF:
21–1 TOP: Budget constraint MSC: Analytical 18. The slope of the budget constraint is determined by the a. relative price of the goods measured on
the axes. b. relative price of the goods measured on the axes and the consumer's income.

On-Work Activity: Is It Worth The Price Of Leisure?
On–work activities are labeled as leisure. The time that is not spent on leisure will be spent on work. Therefore, the formula for leisure would be N=16
– L. Where "N" is leisure, "L" is working hours per day and "16" are the possible hours to work if a person sleeps 8 hours a day. So, the price of
leisure, in terms of its opportunity cost is the lost wages from not working. Individuals would consume leisure up to the point where the marginal
benefit of leisure equals the marginal cost, where the marginal cost is the wage rate. The optimal labor supply is the package of consumer goods and
leisure and implies that an optimal point, the last dollar spent on leisure activities gives the same satisfaction as the last dollar spent on good
consumption.

Essay about Answers to End-of Chapter Questions and Exercises
ANSWERS TO End–of chapter QUESTIONS AND exercises Answers to Questions for Review 1.(Explicit and Implicit Costs) Amos McCoy is
currently raising corn on his 100–acre farm and earning an accounting profit of $100 per acre. However, if he raised soybeans, he could earn $200 per
acre. Is he currently earning an economic profit? Why or why not? Amos McCoy is not currently making an economic profit, despite the fact that he is
making an accounting profit. This is so, because the accounting profit calculation does not take into account an important implicit cost–the opportunity
cost of not raising soybeans. Actually, McCoy is experiencing an economic loss. According to our theory, he should get out of the corn business and
begin... Show more content on Helpwriting.net ...
Accounting profit = $25 million; economic loss = –$5 million c.Accounting profit = $10 million; economic loss = –$10 million d.Accounting loss =
–$25,000; economic loss = –$75,000 4.(Alternative Measures of Profit) Why is it reasonable to think of normal profit as a type of cost to the firm?
Recall that firms produce output using four kinds of resources–natural resources, labor, capital, and entrepreneurial ability. The owner of the firm
supplies some of the resources that the firm employs. Normal profit is the return to the entrepreneurial ability and other resources supplied by the
firm's owners. If this profit is not as large as those individuals could earn in their best alternative situation, they will switch the resources to that
alternative. So, we can think of normal profit as being the minimum return, or cost, that is necessary to keep the firm running. 5.(Short Run Versus
Long Run) What distinguishes a firm's short run period from its long run period? In the short run, at least one of the firm's resources is fixed, usually
the size of the firm. In the long run, all the resources are variable. That is, the quantities of all resources can change to alter the firm's level of output,
including the size of the firm. 6.(Law of Diminishing Marginal Returns) As a farmer, you must decide how many times during the year to plant a new
crop. Also, you

Economics Midterm
Question 1 5 out of 5 points Economic profit is defined as the difference between revenue and ________________. Selected Answer:total economic
cost Correct Answer:total economic cost Question 2 5 out of 5 points In the shareholder wealth maximization model, the value of a firm's stock is
equal to the present value of all expected future ___________ discounted at the stockholders' required rate of return. Selected Answer:profits Correct
Answer:profits Question 3 0 out of 5 points A typical factor that creates principal–agent problems is Selected Answer:the greater number of agents
relative to the number of principals Correct Answer:... Show more content on Helpwriting.net ...
Correct Answer:c.Demand is elastic and marginal revenue is positive. Question 19 0 out of 5 points An increase in the exchange rate of the U.S.
dollar relative to a trading partner can result from Selected Answer:higher interest rates and higher inflation in the U.S. Correct Answer:higher growth
rates in the trading partner's economy Question 20 5 out of 5 points An appreciation of the U.S. dollar has what impact on U.S. manufacturers?
Selected Answer:domestic sales decrease and foreign sales decrease Correct Answer:domestic sales decrease and foreign sales decrease Question 21 0
out of 5 points In an open economy with few capital restrictions and substantial import–export trade, a rise in interest rates and a decline in the producer
price index of inflation willSelected Answer:lower the nominal interest rate Correct Answer:raise the value of the currency Question 22 0 out of 5
points The marginal rate of technical substitution may be defined as all of the following except: Selected Answer:equal to the negative slope of the
isoquant at any point on the isoquant Correct Answer:the rate at which all combinations of inputs have equal total costs Question 23 5 out of 5 points
The marginal product is defined as: Selected Answer:

How Wages are Determined in a Perfectly Competitive Labour...
How Wages are Determined in a Perfectly Competitive Labour Market
As in other markets, the supply and demand of labour determines the price (wage rate) and the quantity (number of people employed). The labour
market is different from other markets (like the markets for goods) in several ways. The most important of these differences is the function of supply
and demand in setting price and quantity. In markets for goods, if the price is high, in the long run more goods will probably be produced until the
demand is satisfied. However, with labour, overall supply cannot in fact be fixed because people have a limited amount of time in the day, and people
are not manufactured. A rise in overall wages... Show more content on Helpwriting.net ...
A decrease in demand would cause the opposite. An increase in supply, however, would cause a shift down the demand curve therefore lowering wage
rates and quantity of labour.
A shift in the supply curve of labour could be caused in many ways. If labour became more or less productive, this would cause the MRP curve to
move – MRP = Marginal revenue product. This is a theory of wages where workers are paid the MRP to the firm. The price of a substitute could
also change i.e. if the price of a substitute goes down, say a certain type of capital, then the demand for that labour will fall. The demand for the
product could also change. If the demand for the product could also change e.g. if the demand increases, this would mean a higher price. This in turn
would give a higher wage rate as wage is determined by MRP which is MPP(marginal physical product X price).
The demand for labour is a derived demand. This means it is decided by how another factor changes e.g. if the demand for a product increases, the
demand for labour in that field will increase. If demand for a product increases, this means a higher price and a higher quantity will be produced (for
profit maximisation). This would cause the MRP curve to shift outwards, which in turn would mean a higher wage rate, or possibly that more workers
are taken on.
The

Review Of Index Building Methodologies Essay
Alexander Khoury
11/7/2014
Review of Index Building Methodologies
Introduction:
In recent decades, academics, policymakers and non–governmental organizations have placed greater focus on establishing more comprehensive
metrics of well–being and development ##. Measures of national welfare have conventionally centered on a fairly narrow band of economic
considerations, such as gross domestic product (GDP) and employment rate. Poverty and wellbeing are now widely understood as multifaceted
concepts which cannot be adequately described through measurements of income alone. Economists and development experts are faced with the
challenge of constructing metrics to distill the various components of wellbeing into an easily comparable index. The following summarizes the most
salient contemporary methods of index construction and provide a brief overview of their strengths and weaknesses.
Transformation Functions: In order to build a multi–dimensional index it is first necessary to convert the various components deemed relevant into a
comparable, aggregatable set of units. That is, to find a way to bring variables like average income (which may be expect to fall in the range of tens of
thousands of dollars) and life expectancy (which would rarely exceed 90 years) into the same scale of measurement. The mathematical tools used to
accomplish this task are known as transformation functions. We can sort the transformation functions which are relevant to index formation into five

Economics
1 Managerial Economics 2010 Answers to All Tutorial Questions Topic 1 : What is managerial economics Questions from Chapter 1 of the Text
(McTaggart, Findlay & Parkin) Review Question 1 (pp. 4) List some examples of scarcity in Australia today. An example of scarcity at the
economy–wide level would be people with lower incomes being forced to choose between food and petrol due to high prices for both. An example of
scarcity at an individual level would be a person unable to afford both life–saving (or life–enhancing) medicine and food. At a more student–oriented
level, examples of scarcity include not enough income to afford both tuition and a nice car, and not enough learning capacity to study for both an
Economics exam and a... Show more content on Helpwriting.net ...
If the marginal benefit of an action exceeds its marginal cost, then the decision maker should undertake the action because the benefit of the action
exceeds its cost and adds to net benefit. Conversely, if the marginal benefit is less than the marginal cost, then the decision maker should not
undertake the action because the benefits of the action fall short of its costs and detract from net benefit. 3 Problems and Applications Question 2
(pp. 16) Which of the following pairs does not match: a. Labour and wages? Labour earns wages, so this pair matches. b. Land and rent? Land
earns rent, so this pair matches. c. Entrepreneurship and profit? Entrepreneurship earns profit, so this pair matches. d. Capital and profit? Capital
earns interest, so this pair does not match. Question 4 (pp. 16) The night before a test, you decide to go to the movies instead of staying home and
working your MyEconLab Study Plan. You get 50 percent on your test compared with the 70 percent that you normally score. a. Did you face a
tradeoff? Yes, you faced a tradeoff. The tradeoff was between a higher test score and an evening with your friends at the movies. b. What was the
opportunity cost of your evening at the movies? The opportunity cost of going to the movies is the fall in your grade. That is the 20 points forgone
from choosing to see the movie rather than study. Question 8 (pp. 16) How would you classify a

Tutorial Questions
ECON 130 tutorial questions Tutorial 1 (week 3): Thinking like an economist. MC1.Suppose Frieda is offered a free voucher that entitles her to
one of the following: a movie, dinner at a restaurant, or a concert. Frieda values the movie at $15, dinner at $20 and the concert at $40. Frieda's
opportunity cost of going to dinner is: a)$15. b)$20. c)$40. d)$55. Question 1. What are the essential elements of the basic competitive model?
Question 2. Consider a lake in a national park where everyone is allowed to fish as much as they want. What outcome would you predict? Might this
problem be averted if the lake were privately owned and fishing licenses were sold? Question 3. What is a model? Why do economists use... Show more
b)More; fewer. c)Fewer; more. d)More; more. ??MC3.Consider an individual whose only endowment is time and who derives utility from leisure
and consumption. For the individual, consumption and leisure are both normal goods. If the income effect dominates the substitution effect, then an
increase in the wage rate will cause the individual's supply of labour to: a)Increase. b)Decrease. c)Remain unchanged. d)None of the above (as it
will depend on the circumstances). Question 1. Consider two individuals who derive utility from leisure and food (and no other goods). Both
individuals have 100 hours of time to divide between leisure and work (labour), and no other form of income. Further, both individuals receive the
same money wage (and face the same money price for food). Using income and substitution effects, explain why we might see one individual respond
to an increase in the wage rate by increasing their supply of labour, while the other individual might decrease their labour supply. Question 2. Consider
an individual who derives utility from leisure and food (and no other goods). Assume both goods always have positive marginal utilities. The individual
has an endowment of time (100 hours), plus an endowment of food. What happens to the individual's supply of labour as their endowment

Economic Cost versus Accounting Cost
CHAPTER
The Cost of
Production
7.1 Measuring Cost: Which Costs
Matter?
7
Economic Cost versus Accounting Cost
в—Џ accounting cost equipment. CHAPTER OUTLINE
7.1
Measuring Cost: Which Costs
Matter?
7.2
Costs in the Short Run
7.3
Costs in the Long Run
7.4
Long–Run versus Short–Run Cost

Curves
7.5
Production with Two Outputs–
Economies of Scope
7.6
Dynamic Changes in Costs–The
Learning Curve
7.7
Estimating and Predicting Cost
в—Џ economic cost
Actual expenses plus depreciation charges for capital
Cost to a firm of utilizing economic resources in production.
Opportunity Cost
в—Џ opportunity cost Cost associated with opportunities forgone when a firm's resources are not put to ... Show more content on Helpwriting.net ...
Of course a prospective sunk cost is different and, as we mentioned earlier, would certainly affect the firm's decisions looking forward.
How do we know which costs are fixed and which are variable?
Over a very short time horizon–say, a few months–most costs are fixed.
Over such a short period, a firm is usually obligated to pay for contracted shipments of materials.
Over a very long time horizon–say, ten years–nearly all costs are variable.
Workers and managers can be laid off (or employment can be reduced by attrition), and much of the machinery can be sold off or not replaced as it
becomes obsolete and is scrapped.
Copyright © 2013 Pearson Education, Inc. Microeconomics Pindyck/Rubinfeld, 8e.
6 of 55

Copyright © 2013 Pearson Education, Inc. Microeconomics Pindyck/Rubinfeld, 8e.
AMORTIZING SUNK COSTS
MARGINAL COST (MC)
в—Џ amortization Policy of treating a one–time expenditure as an annual cost spread out over some number of years.
в—Џ marginal cost (MC) extra unit of output.
Amortizing large capital expenditures and treating them as ongoing fixed costs can simplify the economic analysis of a firm's operation. As we will
see, for example, treating capital expenditures this way can make it easier to understand the tradeoff that a firm faces in its use of labor versus capital.
7 of 55
Because fixed cost does not change as the firm's level of output changes, marginal cost is equal to the increase in variable

Community Rating Is Not Economically Feasible

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