Find the MR and MC for different quantities of production and enter your answers on the table. Find the monopolist’s equilibrium quantity and price.

/in /by

Equilibrium quantity

  1. Find the MR and MC for different quantities of production and enter your answers on the table.
  2. Find the monopolist’s equilibrium quantity and price.

iii. From the table can we obtain a long run perfectly competitive equilibrium price and quantity? Explain why or why not. (HINT: In long run perfect competition leads to zero economic profit).

Quantity Total Revenue Total Cost MR MC
6 110 80    
7 122 85    
8 132 92    
9 140 101    
10 146 114

 

Calculate the rate of growth of the exchange rates between two currencies using exchange rate data on your selected countries. What is the rate of growth and which formula is used to calculate it?

/in /by

Task One

Calculate the rate of growth of the exchange rates between two currencies using exchange rate data on your selected countries. Before doing so, answer the following question.

What is the rate of growth and which formula is used to calculate it?

Display the rates of growth of the exchange rates between the two currencies of your selected countries in Excel or SPSS (or Tableau) chart/graph over the period 2000-2021.

Task Two

Calculate the inflation rates in each of your two selected countries using the Consumer Price Index (CPI) from the 2022 WDI data. Remember the inflation rate is the rate of growth of the CPI.

Display the inflation rates of your selected countries in Excel or SPSS (or Tableau) chart/graph over the period 2000-2021. Then answer the following question.

Which of your two selected countries has the highest rate of inflation based on the CPI?

Task Three

Calculate the inflation rates in each of your two selected countries using the GDP Deflator from the 2022 WDI data. Remember the inflation rate is the rate of growth of the GDP Deflator.

Display the inflation rates of your selected countries in Excel or SPSS (or Tableau) chart/graph over the period 2000-2021. Then answer the following question.

Which of your two selected countries has the highest rate of inflation based on the GDP Deflator?

Task Four

Calculate the difference between your two selected countries CPI based inflation rate. This difference is the predicted rates of growth of the exchange rate over the period 2000-2021.

Also, calculate the difference between your two selected countries GDP Deflator based inflation rate. These differentials are also known as the predicted rates of growth of the exchange rate over the period 2000-2021.

Display the predicted rates of growth of the exchange rate of currencies of your selected countries (from both the CPI and the GDP Deflator) in Excel or SPSS (or Tableau) chart/graph over the period 2000-2021. Then answer the following question.

Are there any substantial differences in the predicted rates of growth of the exchange rates of currencies of your selected countries over 2000-2021 from the two indicators (CPI and GDP Deflator)?

Task Five

Display the actual and predicted rates of growth of the exchange rate of currencies of your selected countries (calculated in Task One and in Task Four) in Excel or SPSS (or Tableau) chart/graph over the period 2000-2021. Then answer the following question.

Is the PPP a theory of the exchange rate determination in the long run based on the CPI? (Hints: You should compare the actual rates of growth of the exchange rates of currencies of your selected countries to the predicted rates of growth of the exchange rates of currencies of your selected countries based on the CPI).

Is the PPP a theory of the exchange rate determination in the long run based on the GDP Deflator? (Hints: You should compare the actual rates of growth of the exchange rates of currencies of your selected countries to the predicted rates of growth of the exchange rates of currencies of your selected countries based on the GDP Deflator)

Task Six

Use your answers to the questions and your visuals to draft a full report describing all the results obtained from Task One to Task Five. What were the challenges in completing this project and how did you overcome them?

 

Recognize monetary policy as an important tool of government intervention in a market economy. Evaluate effects of changes in a tax policy. Explain inflation. Is zero inflation good target?

/in /by

Inflation

12.1 Learning Outcomes:

  • Recognize fiscal policy as an important tool of government intervention in a market economy.
  • Recognize monetary policy as an important tool of government intervention in a market economy.
  • Evaluate effects of changes in a tax policy.

12.2 Action Required:

Watch the video using the following link:

(908) Introduction to inflation | Inflation – measuring the cost of living | Macroeconomics | Khan Academy – YouTube

12.3 Test your Knowledge (Question):

Explain inflation. Is zero inflation good target?

 

Do any of the inputs in this example exhibit diminishing returns to scale? If so, which and how do you know? If not, how do you know?

/in /by

Problem 1: Short-Run Profit Maximization [10 points]

Consider a firm that uses both capital (K) and labour (L) to produce a final product (Q) that it sells at the market price $5. The firm buys Labour at a cost of $4 per unit and capital at a cost of $10 per unit. The firm is a price-taker for all prices with the following production function:

𝑄 = 4𝐾 ! “# 𝐿

! “#

This production function implies the following:

𝑀𝑃𝐾 = 2 𝐿

! “#

𝐾 ! “#

𝑀𝑃𝐿 = 2 𝐾 ! “#

𝐿

! “#

Suppose also that the firm currently has 16 units of capital (K = 16) in the Short-Run. For Q1 – Q6, assume that we are operating in the Short-Run:

  1. Given the above production function, write down an expression for Labour employed as a function of the quantity produced (i.e. L = f(Q)). [1 point]
  2. Use the MPL and the wage rate to write down an expression for the Firm’s Marginal Cost per unit of output (Q) produced as a function of Q. [3 points]
  3. Show that the firm’s profit-maximizing quantity (Q*) is equal to 160 in the short-run. [1 point]
  4. What are the firm’s variable costs (VC) and fixed costs (FC) at Q*? [2 points]
  5. What are this firm’s short-run profits in this example? [1 point]
  6. What would be the firm’s Short-Run profits if it chooses to shut down? Should the firm keep producing in the short-run? How do you know? [2 points]

 

Problem 2: Long-Run Cost Minimization [8 points]

Use the same production function, MPK, MPL, and prices from Problem 1 (Q 1 – 6) for the following Q7 – Q9. Suppose also that we are now in the Long-Run, and that the firm has decided to still produce the same Q* as in Problem 1. That is, the firm decides to set Q = 160.

  1. If the firm wants to cost minimize, what must be the ratio of K to L that they employ given the prices in this market? [3 points]
  2. Suppose that the firm wants to produce Q* = 160. What is its cost-minimizing choice of K & L? [3 points]
  3. What are the firm’s profits with this choice of K & L? Is this greater than or less than your answer to Q5? Why is this the case? [2 points]

 

Problem 3: Long-Run Cost Minimization [12 points]

Suppose that there is a firm that produces chairs and the firm receives an order for 80 chairs. The firm has two resources available to it. The first is a (human) worker, who must be paid $18 for each hour they spend producing chairs. The second is a robot, that costs $15 of inputs (including electricity and maintenance) for each hour it works. Chairs produced by either method are identical and of equivalent quality. Assume that the use of these two inputs is completely independent. This means that the number of hours of robot-work does not affect the productivity of the worker, and vice versa. The production of chairs based upon the numbers of hours of each of the inputs used is given below. For example, 2 hours of robot time will produce 10 chairs. 7 hours of worker time will produce 54 chairs.

Robot

Hours

Robot

Production

Robot

Hours

Worker

Production

0 0 0 0

1 5 1 15

2 10 2 25

3 15 3 33

4 20 4 40

5 25 5 45

6 30 6 50

7 35 7 54

8 40 8 57

9 45 9 58

10 50 10 59

11 55 11 60

12 60 12 61

13 65 13 62

14 70 14 63

  1. Do any of the inputs in this example exhibit diminishing returns to scale? If so, which and how do you know? If not, how do you know? [2 points] Assume that the sale price of chairs is always sufficiently high that it is profitable to fulfill this 80-chair order. The firm needs to make 80 chairs to fulfill its order. Assume also that the firm is profit maximizing (& therefore cost minimizing).
  2. What combinations of robot and worker hours must they use to minimize costs? Show your work. [Use the equation that must be true for cost minimization for full credit] [4 points] Now suppose that the local economy increases the minimum wage, and the price of an hour of a worker’s time increases from $18 to $27.
  3. What does the principle of substitution say should happen to the firm’s use of (i) worker hours and (ii) robot hours? Explain your answer. [2 points] Continue to assume that it will be profitable to produce the 80 chairs and that the firm is profit- maximizing.
  4. With this new price for worker hours, what is the new combination of robot and worker the equation that must be true for cost minimization for full credit]

Explain the difference between the price effect and the output effect when a new firm enters a market.

/in /by

The difference between the price effect and the output effect

1-Explain the difference between the price effect and the output effect when a new firm enters a market.

2-Lola is the owner of a bakery that earns 0 (zero) economic profit. Last year, her total revenue was $165,000, her rent was $10,000, her labor costs were $85,000, and her overhead expenses were $11,000.

  1. What were Lola’s total explicit costs?
  2. What were Lola’s total implicit costs?
  3. Currently, Lola has 8 employees; with 8 employees, her bakery can produce 12 wedding cakes per day. If she hired a ninth employee, she’d be able to produce 16 wedding cakes per day. What is the marginal product, in terms of wedding cakes, of the ninth employee?

 

Define and summarize what financial inclusion entails. Review evidence for the effectiveness of the individual financial products.

/in /by

Financial inclusion

Read the following pieces on “financial inclusion”:

  • https://www.worldbank.org/en/topic/financialinclusion/overview
  • https://blogs.worldbank.org/allaboutfinance/what-do-we-know-about-link-between-financial-inclusion-and-inclusive-growth
  • https://www.vox.com/future-perfect/2019/1/15/18182167/microcredit-microfinance-poverty-grameen-bank-yunus

Using these resources and the evidence covered in lectures please

  • i) Define and summarize what financial inclusion entails (i.e. the overall goal and individual products / interventions under consideration)
  • ii) Review evidence for the effectiveness of the individual financial products (i.e. what do they do well or not do well respectively)
  • iii) Lay out one recommendation to a policy maker about which financial products to support based on their promise for improving poor household’s welfare.

 

Use summarizing, quoting, and paraphrasing to illustrate what’s been said about the issue. Use academic response methods to contribute meaningfully to the conversation about the issue.

/in /by

Economic Inequality in America

The Academic (Conversational) Essay

Introduce the issue
Use summarizing, quoting, and paraphrasing to illustrate what’s been said about the issue.
Use academic response methods to contribute meaningfully to the conversation about the issue.

 

Describe the role government should play in correcting for market failures. Make sure to apply Saint Leo’s Core Values to your analysis, remembering that responsible stewardship calls on us to be ‘resourceful’.

/in /by

Correcting market failures

Describe the role government should play in correcting for market failures. Make sure to apply Saint Leo’s Core Values to your analysis, remembering that responsible stewardship calls on us to be ‘resourceful’. You should cite specific examples and applications, and take a clear stand on whether you believe the actions of government work towards resolving market failures or not.

Discuss why do wages differ across occupations?

/in /by

MIT Open Course Ware video lecture series, “Uncertainty”

Read the following to prepare for this week:

  • Survey of Economics, Chapter 10: Imperfect Information, External Benefits, and External Costs

Video:

Watch the following video(s), which you can access in the Weekly Media object or by clicking on the link(s) below: and answer the question.

12.3 Test your Knowledge (Question):

Q1 Discuss why do wages differ across occupations?

 

Choose company and calculate the cost of production with Two Outputs: • Cost in the Short Run, • Cost in the Long Run, • Long-Run versus Short-Run Cost Curves, Production with Two Outputs—Economies of Scope.

/in /by

Macroeconomics

Choose company and calculate the cost of production with Two Outputs: • Cost in the Short Run, • Cost in the Long Run, • Long-Run versus Short-Run Cost Curves, Production with Two Outputs—Economies of Scope.