The price elasticity of demand for Hass avocados in the Dallas/Fort Worth market has been estimated to be 0.75. Assuming again that the pricing decisions are being made by a monopolist firm, do you think that this firm has selected its profit maximizing price for avocados? If not, should the firm increase or decrease the price of its avocados? Explain clearly.

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ECO 2 – Principles of Economics II

 Dr. Roberto Mazzoleni

UNIT 7 – Homework Assignment – Due 4.25.23 (11:59pm)

Question 1

The table below includes simplified data on the market demand for an antihistamine drug as well as data on the total costs incurred by the firm offering this drug to the public.

Quantity Price Total Revenues Marginal Revenue Total Cost Fixed Cost Marginal Cost ATC
0 $6.00     $0.70      
1 $5.50     $1.70      
2 $5.00     $2.70      
3 $4.50     $3.70      
4 $4.00     $4.70      
5 $3.50     $5.70      
6 $3.00     $6.70      
7 $2.50     $7.70      
8 $2.00     $8.70      
9 $1.50     $9.70      
10 $1.00     $10.70      
11 $0.50     $11.70      

 

  • Complete the table by calculating the total revenues, marginal revenue and marginal cost corresponding to each level of production/sales in the table.
  • What are the profit maximizing levels of P and Q that the drug manufacturer should choose? Explain briefly how you identify these values.
  • Draw a diagram illustrating the demand curve for the drug, its marginal cost, and identify the P and Q pair that you selected at (b).
  • Use your diagram and data to estimate the consumer and producer surpluses corresponding to the profit-maximizing price and output you chose.

 

Question 2

For each of the following events explain whether or not it would contribute to the realization of economies of scale by the relevant business firms.

  • Large supermarkets being able to drive down the cost of purchasing milk as it increases its scale of business.
  • The higher the number of restaurant visitors making dinner reservations on Open Table, the more likely it is that Open Table will be able to sell reservation services to additional restaurants.

 

 

 

Question 3

The following data provide estimates for the price elasticity of demand for Hass avocados in a handful of US metropolitan markets.

Metro Area Price elasticity
Atlanta 1.24
Boston 1.19
Denver 1.39
Detroit 1.51

 

  • Assuming that pricing decisions for these markets are made by a monopolistic firm (or trade association), which of these metropolitan markets is characterized by the largest markups? Explain your answer.
  • The price elasticity of demand for Hass avocados in the Dallas/Fort Worth market has been estimated to be 0.75. Assuming again that the pricing decisions are being made by a monopolist firm, do you think that this firm has selected its profit maximizing price for avocados?  If not, should the firm increase or decrease the price of its avocados?  Explain clearly.

If the price level in the U.S. is 128the price level in Mexico is 124, and the real exchange rate is 20.02 pesos (Mexico’s currency) per dollar, what is the nominal exchange rate from the U.S. perspective?

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 Exchange rate

If the price level in the U.S. is 128the price level in Mexico is 124, and the real exchange rate is 20.02 pesos (Mexico’s currency) per dollar, what is the nominal exchange rate from the U.S. perspective? Round to two decimal places and do not include the “pesos per dollar For example, if your answer was 5.675 pesos per dollar, you would only enter 5.68.

Calculate the expected cost at each chance node in the decision tree. 3. Calculate the ICER. 4. Given a willingness-to-pay of $1000 per extra success, which antibiotic would you recommend to your patients? Justify your answer.

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Decision Tree

You have two options (antibiotic A and antibiotic B) for the treatment of infection. Each antibiotic has two possible outcomes (clinical success of treatment and failure of treatment). Some of patients who receive antibiotics may experience adverse events regardless of the outcomes. Those who experience adverse events will be treated for those events.

Now, you’ll decide which antibiotic you’ll recommend for your patients. All the information you need to
make this decision is shown below:

 

1. Assign the relevant cost at each terminal node in the decision tree.
2. Calculate the expected cost at each chance node in the decision tree.
3. Calculate the ICER.
4. Given a willingness–to–pay of $1000 per extra success, which antibiotic would you recommend to your patients? Justify your answer.

Find the average cost function. What is the efficient scale of production? Illustrate it on your graph for the previous part by drawing an appropriate secant line. What is the average cost at this scale?

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Microeconomics analysis

1 Convex-concave costs

Consider the 1-input, 1-output technology defined by the cost function
f (z) = {(z+1)2— 1, z<1
8-V.Z — 5, z> 1

1.  Fix the price of the input good at w = 1. 1. Find the total cost function. Plot it for quantities up to 10.

2. Find the average cost function. What is the efficient scale of production? Illustrate it on your graph for the previous part by drawing an appropriate secant line. What is the average cost at this scale?

3. Find the marginal cost function. On a new graph, plot it and the average cost function for quantities up to 10, and mark the efficient scale and corresponding average cost.

4. Derive the firm’s supply correspondence for the output good as a function of the output price p. Illustrate it on the same graph you used for the previous part.

Describe the findings of your scatterplots in 2-3 paragraphs. Define discrete and continuous variables, then categorize each variable in this assignment as one or the other. Explain the relationship between education, IQ and wages.

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Economics of Education PS 5

Write the name of all group members, and your responses on a single document to submit.

Estimating the Returns to Schooling
For this section we will analyze data describing individual earnings, their education and experience profile, and other characteristics. We will dive into the economic relationship between education and wages in this example.

Q1a. Load wagedata.csv in your workstation and name the data frame wages main.
The variable wage represents monthly wages. We want to convert this value into 2020 dollar values. First create a variable CPI and set it equal to 0.4. Then, create a new variable wages main$wage2020 by dividing the wage by the CPI. Use the describe function and report the summary statistics for monthly wages in 2020 dollars. Include the mean, standard deviation, median, max, min, Q1 and Q3.

Q1b. Let’s create an hourly wage variable. The current variable hours is average hours worked per week. Create a variable annualhours equal to weekly hours multiplied by 52. Also, create a varaiable annualwages, noting that the current 2020 wage measure is in months. Next, create a variable hourlywages. Use the describe function and report the summary statistics for hourly wages. Note any cause for concern you may have with the data.

Q1c. The education variable educ reports the highest level of education attainment for each person in the sample. Count the number of people in the sample with each education level. Describe what you see in 2-3 sentences. Overall, does the data align with what you would expect?

Q1d. Produce five scatter plots and paste them here. Note that tenure is defined as years in the current job, and experience is defined as overall years of work experience.
• Education vs. IQ (IQ on x-axis)
• Hourly Wages vs. IQ (IQ on x-axis)
• Hourly wages vs education (education on x-axis)
• Hourly wages vs tenure (tenure on x-axis)
• Hourly wages vs experience (experience on x-axis)

Q1e. Describe the findings of your scatterplots in 2-3 paragraphs. Define discrete and continuous variables, then categorize each variable in this assignment as one or the other. Explain the relationship between education, IQ and wages. Then describe the what you find in terms of tenure, experience and wages. Any surprises on this visual inspection of the data?

Q1f. First create three new variables: Log(HourlyWage), exper2, and tenure2. Then, use linear regression to estimate the returns to education, also known as the Mincer equation. Log(HourlyW agei) = β0 + β1Educi + εi.

Describe the estimate you get for bβ1. Based on your results, how much does the model predict your hourly wage to rise for one additional year of schooling completed? What makes this estimate difficult to interpret?

 

Q1g. Next estimate
Log(HourlyW agei) = β0 + β1Educi + βexperiencei + β3experience2 i + εi. Report the coefficient for bβ1. How did it change and why?

 

Q1h. Substitute the tenure variables for the experience variables in 2f and run the regression again. Do your results for bβ1 change much?

What can the use of a long, complex selection process symbolize to job seekers? How do you think this would affect the organization’s ability to attract the best employees?

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Economics Question

Some organizations set up a long and complex selection process. In some people’s opinion, not only is this kind of selection process more valid, it also has symbolic value.

  • What can the use of a long, complex selection process symbolize to job seekers?
  • How do you think this would affect the organization’s ability to attract the best employees?
  • Share your past experience as an interviewer or interviewee as you respond to these questions.

Discuss: “The equilibrium output is an efficient allocation of resources. Hence laissez-faire is the best policy”.

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Econ201 discussion

Discuss: “The equilibrium output is an efficient allocation of resources. Hence laissez-faire is the best policy”.

Note:- You are required to reply to at least two peer responses to this week’s discussion question. Your replies need to be substantial and constructive in nature.

Describe in detail and with examples theory of consumer choice, asymmetric information, political economy, and behavioral economics. Describe the ultimatum game. What outcome from this game would conventional economic theory predict? Do experiments confirm this prediction? Explain.

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Micro economics management

In one doc Answer the following questions and add link sources no plagiat:

1. Describe the aspects of the theory of consumer choice. Define a consumer’s indifference curve and explain the properties of this curve.

2. Describe in detail and with examples theory of consumer choice, asymmetric information, political economy, and behavioral economics. Describe the ultimatum game. What outcome from this game would conventional economic theory predict? Do experiments confirm this prediction? Explain.

3.Give several examples of environmental forces that might affect supervisors and require changes to an organization.

4. Read Case 15-A “Technology Drives Change” (pp. 426-427) and answer “Responding to the Case”.

5. Describe the pieces of legislation that have been most important in defining the rights of management and unions? Provide the highlights of each.

6. Read Case 16-B “Faragut Services Faces a Union Challenge” (p. 450) and answer “Responding to the Case”.

What are Forbes’s reasons for the housing bubble and how it related to the Federal Reserve Bank’s policies? What does a weak dollar mean and what issues may come of it? What one other concept or idea stood out to you in Chapter 1?

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In Money We Trust? Documentary and Money Book Analysis

Prior to beginning work on this assignment,

Watch the 1-hour documentary, In Money We Trust?

Read Chapters 1 through 6 of Money: How the Destruction of the Dollar Threatens the Global Economy—And What We Can Do About It. ( Attached)

Steve Forbes is an expert on the global economy, monetary policy, and politics, and for this assignment, you will have the opportunity to dissect and analyze both his Money book and the In Money We Trust? documentary. Through a written analysis, you will explore the importance of a sound money system.

It is suggested you watch the documentary first to gain insight on some of the basic concepts. Next read the book and answer the questions in sequence. Answer each of the questions noted in each section below. Each section should be approximately one page in length with a total paper length of five to six pages. Be sure to analyze and write in your own words; do not just use quotes to make your points. Additionally, judge the importance of a sound money system and assess the value of Steve Forbes’s conclusion in using the gold standard.

Section 1: Chapter 1: How We Got Here

  • What are Forbes’s reasons for the housing bubble and how it related to the Federal Reserve Bank’s policies?
  • What does a weak dollar mean and what issues may come of it?
  • What one other concept or idea stood out to you in Chapter 1?

Section 2: Chapter 2: What Is Money

  • Why must money be stable?
  • What is Forbes’s prediction of Bitcoin?
  • This was noted at the end of the chapter: “Money measures wealth, but it does not create it.” What does this statement mean?

Section 3: Chapter 3: Money and Trade

  • What did Nixon do with the gold standard and what was the impact?
  • What is Forbes’s view of trade deficits? Are his viewpoints good or bad?
  • What one other concept or idea stood out to you in Chapter 3?

Section 4: Chapter 4: Money Versus Wealth; Chapter 5: Money and Morality

  • What happens when the supply of money is increased?
  • How can changes in monetary policy act as a system of communication?
  • How are money and trust tied together?
  • What one other concept or idea stood out to you in either Chapter 4 or 5?

Section 5: Chapter 6: The Gold Standard

  • What is the gold standard and how might it work in the US?
  • Why does Steve Forbes believe the gold standard should be brought back?
  • What is your overall conclusion of Steve Forbes’s view of money?

 

How does the Fed control the money supply? Be sure to explain how they can expand or restrict the money supply. How does the banking system create money? List two to three pros and cons of the Federal Reserve Bank.

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Federal Reserve Bank

Monetary policy is largely determined by the Federal Reserve Bank (Fed) in the United States. For this discussion, let’s cordially debate the necessity of the Fed.

For your initial post address the following:

  • How does the Fed control the money supply? Be sure to explain how they can expand or restrict the money supply.
  • How does the banking system create money?
  • List two to three pros and cons of the Federal Reserve Bank.
  • What is your conclusion: is the Fed necessary? Support your opinion.

Response should be a minimum of 200 words. Assess the perspectives of several scholars. Support your response with at least one scholarly and/or credible resource. APA Format. Please cite all references.