2 macroeconomics ,,

Explain the difference between a change in supply (or demand) and a change in quantity supplied (or demanded).

Question 2

I was wondering what some examples of future expectations may be from the citizens? For example, may future expectations of the water usage going up or the water prices lower? I understand that you said that the sellers anticipate a cheaper price but why would that cheaper price be necessary for the future? If you could add some details about that I would love to read your input on that. Nonetheless, you have answered these questions wonderfully. Let US be the home country and Canada be the foreign country. Suppose that Canada experiences a temporary decline in their real GDP. Assume all else is constant.

Consider the FX market and the money market diagrams we learned within the asset approach to exchange rate determination and answer the following questions accordingly. Explain when the questions ask you to explain. Do not include graphical illustrations in your submitted answer but feel free to draw them on a paper as they will help you develop your answer.

[5 points] What happens in Canada money market following the policy change? Explain any changes in the graph. [5 points] What happens in the FX market following the policy change? Explain any changes in the graph. What happens to [5 points] How does the equilibrium spot exchange rate E$/CD change? Why (3 points)?

All of these ways in which the poor cope with risk tend to be very costly. This has been well documented for agriculture: In India, poor farmers use farm inputs in a more conservative but less efficient way when they live in areas where rainfall is more erratic. Poor farmers' profits rates go up by as much as 35 percent when they live in areas where the yearly rainfall pattern is very predictable.

(a) Using the concepts studied last class, can you explain why poor farmers might choose to use farm inputs in a "less efficient way"? Does it mean that poor farmers are not rational? (Please explain briefly. One or two sentences are enough)

(b) Can you think of a possible Pareto improving trade between the farmer and some other economic agent? Explain briefly.

(c) How do economists explain the fact that these Pareto improving trades are difficult to come about? Explain briefly

Part B.

(d) A farmer must choose whether to invest in the purchase of an input (say a fertilizer). By investing, the farmer faces the following income prospect (assume that he does not have any other source of income).

Normal rain Little rain

Invest $1000 $100

And by not investing

Normal rain Little rain

Not Invest $800 $200

Assume that the probability of the event "Little rain" is equal to = 1 10 (and the probability of the event "Normal rain" is 1 = 9 10 ). If the farmer is risk neutral, will the farmer invest or not? Explain

(e) Stop assuming that the farmer is risk neutral, but keep the same assumptions as in (1d). Assume that the farmer has preferences represented by the utility over monetary outcomes u(x) = 120 8000 x (1) Will a farmer with the above preferences invest or not? Explain

(f) Now assume that a (risk neutral) insurance company offers the policy that pays $C if the event "Little rain" occurs. Assume that the policy is fairly priced: How much is the premium that the insurance company charges?

(g) Keep assuming that insurance company offers a fairly priced policy. However the insurance company does not fix the coverage C, but lets the customer choose C. Under these assumptions, will the farmer with preferences described in the point (1e) invest or not? Will he buy insurance? If so, how much coverage C will he choose?

(h) Now assume that there are two types of farmers: The farmer we met before (call him L) and a farmer who lives in a slightly different microclimate (call this farmer H). Assume that farmer H is identical to farmer L apart for one thing: In the microclimate in which farmer H lives, the probability of the event "Little rain" is equal to H = 0.2. If the insurance company can distinguish between the two farmers and offer different insurance policies, what is the fair premium for the farmer H? Will he buy insurance? How much? will he invest?

(i) Now assume that the insurance company cannot distinguish between the two types of farmers. And assume that the proportion of H farmers is equal to 0 < q < 1. Without making any calculations can you explain why in such a situation we can have "adverse selection". Be as clear as you can.

Question: Describe your target market. Consider both B2C (business to consumer) and B2B (business to business) customers, with as much detail as possible include demographics (factual data) and behavioral characteristics (attitudes and behaviors) when identifying your target market.

At the end of this section, the audience should be convinced that you have selected a target market for your business that is suitable for e-commerce.

Statement: The business is selling handmade knitwear. Pieces will include clothing articles, and accessories such as slippers, hats, headbands, etc. The people chosen as the target market are: Men, women, kids and pets (cats and dogs)

Alpine Tire Company has determined from road tests that the mean mileage of its main product is 50,000 miles with a standard deviation of 5,000 miles, and that the collected data are normally distributed. Alpine wishes to offer a warrantee providing free replacement for any new tire that fails before the guaranteed mileage.

a. If Alpine wishes to replace no more than 10% of the tires, what should the guarantee mileage be?

b. In addition, the data collected indicate that the normal distribution is a reasonable assumption. What is the probability that the tire mileage will exceed 50,500miles?

[2:12 AM, 10/29/2021] Fridah: 1) Describe the vertical chain for biotechnology productions. What "make" decisions has Nucleon already made? What "buy" decisions has it already made? Evaluate these decisions.

2) Draw a decision tree for stage I/II/III

3) How would you go about evaluating which option to take using the decision tree?

4) What make or buy decisions confront Nucleon in this case? Are there any other options besides those mentioned in the case that Nucleon might explore?

5) What other factors must Nucleon consider before reaching a final decision? When all factors are taken together, what should Nucleon do? During this piece of the evaluation, see if you can identify where the following concepts appear

Specific assets

Leakages

Possible coordination costs

6) Which must come first? Long term strategy consideration or production strategy for CRP-I? [2:13 AM, 10/29/2021] Fridah: Generally, we observe that the demand curve is downward sloping and that the price is inversely related to demand. In this example, as the price rises from $20 to $25, the quantity demanded will become less than 4000 units according to the law of demand to this extent there are less sales. This phenomenon can be explained by a number of facts.

Substitution effect- as the price of a product Increases, the substitutes of this product become relatively cheaper. Consumers tend to prefer cheaper commodity over the costlier one. This will lead to shift in the consumption pattern towards its substitutes hence decreasing it's demand. Then, as the price increases quantity demanded falls.

Number of uses of the commodity- some of the products can be put to multiple uses. Amongst the uses, some are more important while others are less important. When the price of the product goes higher, the consumers will purchase such goods only for more important uses and will withdraw its usage from less important ones. The demand can also fall in such a way resulting from an increase in price.

Direct proof:

Electricity can be put to multiple uses such as cooking, lighting, heating etc. The most important is lighting. When the price of electricity is lower, say $20 consumers will tend to use it for less important purposes such as cooking and heating. However, as the price goes up say up to $25, it will be be used most on more important uses ultimately leading to a fall in demand. Same is the case with other goods.

However, it is also true that the demand curve may not always show the same behavior. Sometimes, it may change in the direction of the change in price. Nevertheless, these are exceptional cases and the law of demand holds good in most of the cases. [2:14 AM, 10/29/2021] Fridah: Generally, we observe that the demand curve is downward sloping and that the price is inversely related to demand. In this example, as the price rises from $20 to $25, the quantity demanded will become less than 4000 units according to the law of demand to this extent there are less sales. This phenomenon can be explained by a number of facts.

Substitution effect- as the price of a product Increases, the substitutes of this product become relatively cheaper. Consumers tend to prefer cheaper commodity over the costlier one. This will lead to shift in the consumption pattern towards its substitutes hence decreasing it's demand. Then, as the price increases quantity demanded falls.

Number of uses of the commodity- some of the products can be put to multiple uses. Amongst the uses, some are more important while others are less important. When the price of the product goes higher, the consumers will purchase such goods only for more important uses and will withdraw its usage from less important ones. The demand can also fall in such a way resulting from an increase in price.

Direct proof:

Electricity can be put to multiple uses such as cooking, lighting, heating etc. The most important is lighting. When the price of electricity is lower, say $20 consumers will tend to use it for less important purposes such as cooking and heating. However, as the price goes up say up to $25, it will be be used most on more important uses ultimately leading to a fall in demand. Same is the case with other goods.

However, it is also true that the demand curve may not always show the same behavior. Sometimes, it may change in the direction of the change in price. Nevertheless, these are exceptional cases and the law of demand holds good in most of the cases.