Analyze following attachments and provide solutions.

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____24.El Nio wind patterns affected the weather across the United States during the winter of 1997-1998. Suppose the demand for home heating oil in Connecticut is given by Q = 20 - 2Phho + 0.5Png - TEMP, where Q is the quantity of home heating oil demanded, Phho is the price of home heating oil per unit, Png is the price of natural gas per unit, and TEMP is the absolute difference between the average winter temperature over the past 10 years and the current average winter temperature. If the current price of home heating oil is $1.20, the current price of natural gas is $2.00, and the average winter temperature this year is 40 degrees compared to 28 degrees over the past 10 years, the quantity of home heating oil demanded is:

____25.El Nio wind patterns affected the weather across the United States during the winter of 1997-1998. Suppose the demand for home heating oil in Connecticut is given by Q = 20 - 2Phho + 0.5Png - TEMP, where Q is the quantity of home heating oil demanded, Phho is the price of home heating oil per unit, Png is the price of natural gas per unit, and TEMP is the absolute difference between the average winter temperature over the past 10 years and the current average winter temperature. If the current price of home heating oil is $1.20, the current price of natural gas is $2.00, and the average winter temperature this year is 40 degrees compared to 28 degrees over the past 10 years, if the sellers of home heating oil are profit maximizers, they should:

____26.Marginal revenue can be defined as the:

____27.Total revenue can be defined as:

____28.If price is $25 when the price elasticity of demand is -0.5, then marginal revenue must be:

____29.Total revenue is rising with increases in output whenever:

____30.The demand for answering machines is Q = 1,000 - 150P + 25I. Assume that per capita disposable income I is $200. When the price of answering machines is P = $10, the income elasticity of demand is:

____31.The demand for fax machines has been estimated to be Q = 1,000 - P + 40L, where P is the price of the machines and L is the average cost of a 10-minute midday call from Los Angeles to New York. At a fax machine price of $400 and a phone call cost of $10, the cross-price elasticity of demand for fax machines with respect to the price of phone service is:

____32.The constant price elasticity of demand for cigarettes has been estimated to be -0.5. To reduce smoking by 50%, approximately how much tax needs to be added to a $1 pack?

____33.Consider the indifference map below. This map represents Larry's preferences over two goods, oranges and grapefruits. Larry:

File

will always choose to consume a combination of oranges and grapefruits.

____34.Don consumes bagels and cream cheese. He likes to place 2 ounces of cream cheese on each bagel, no more, no less. In this case, Don's indifference curves for bagels and cream cheese will be:

____35.At equilibrium, the marginal rate of substitution describes:

____36.The marginal rate of substitution:

____37.A consumer buys 12 units of entertainment, measured on the horizontal axis, and 84 units of "all other things." The consumer's income elasticity of demand is equal to 1 for both goods. If income increases by 10%, then the consumer's marginal rate of substitution at the utility-maximizing market bundle will:

____38.The consumer's optimal consumption of X and Y is characterized by:

.

____39.The marginal rate of substitution of X for Y is defined as:

____40.Suppose Al is currently consuming four movies and four concerts per month. If his utility function is given by U = 15M0.5C, where M represents the number of movies seen and C represents the number of concerts attended, what is Al's total utility equal to?

____41.Suppose Al is currently consuming four movies and four concerts per month. If his utility function is given by U = 15M0.5C, where M represents the number of movies consumed and C represents the number of concerts attended, what is the marginal utility of the next concert Al will attend?

.

alternative levels of utility that a consumer might get from consuming a given market basket.

____43.Consider the following budget constraint. Dennis spends all his money on sweaters and sweatshirts. If the price of sweaters is $15, how much money does Dennis have in his budget?

File

____44.Consider the following budget constraint. Dennis spends all his money on sweaters and sweatshirts. If the price of sweaters is $15, what is the price of sweatshirts?

File

None of the above.

____45.A consumer's budget constraint changes slope whenever:

absolute prices change.

____46.Jamie is considering the purchase of a new car for $20,000. Her income is $60,000, and her alternative is "all other things," which sell for $1 each. If all other things are plotted on the vertical axis and her marginal rate of substitution is File, then she will buy File car(s).

____47.The consumer's optimal consumption of X and Y occurs where the consumer:

____48.Jane spends $210 per month on wine and beer. Her utility function is given by TU = 100WB, where W represents the number of bottles of wine that she buys and B represents the number of cases of beer that she buys. If wine costs $10 per bottle and beer costs $15 per case, she will maximize utility by buying:

.

____49.Fred consumes quantities of butter and margarine; his utility function is given by U = 5M + 2B. If Fred has $10 to spend on butter and margarine, and if butter costs $2 per pound and margarine costs $1 per pound, what is his optimal bundle of butter and margarine?

____50.Betty spends all her income on cheese and crackers. She finds that the marginal utility of cheese is 10 and the marginal utility of crackers is 15. The price of cheese is $5 per unit, and the price of crackers is $3 per unit. At this point, Betty:

____51.In most cases, at the optimal consumption bundle:

____52.Consider the following indifference map. The price of Y is $5. Two points on a demand curve for good X are:

File

none of the above.

____53.Using the indifference map below, two points on a demand curve for good Y are:

The answer cannot be determined from the information given.

____54.Consumer surplus is important to firms because:

____55.The following diagram represents the demand for trips to a local swimming pool during the summer. If the city subsidizes the swimming pool so that swimming is free, the number of people swimming each day will be:..

QUESTION 1 There are two customer service workers; worker / (/ e (1, 2) ) chooses an effort level e e [0,20) to exert in helping a customer. The cost of effort is qre) = (ed) for worker 1 and 15 glen=(e)' for worker 2. The customer's satisfaction level equals the total effort that the 10 workers exert, up to a maximum satisfaction level of 10, that is, it is equal to minte, +e,,10}. Each worker's payoff is the difference between the customer's satisfaction level and his/her own effort cost. Consider first the game Gin which the two workers choose their efforts simultaneously. (a) Write down each worker's payoff function in G. (b) Describe each worker's best response (or reaction) function in G. (c) Draw the two best response functions in the same diagram and find all the pure-strategy Nash equilibria of G. Now consider sequential versions of the interaction. In game I, first Player 1 (= worker 1) selects an effort level, then Player 2 (= worker 2) - after observing Player I's choice - chooses her own effort level. (d) Completely describe all the pure-strategy subgame perfect equilibria of I2. In game I, the sequence of events starts with those in A, but after Player 2 moves, Player 1 observes Player 2's choice and decides whether to exert some additional effort of = [0,co), so that his own total effort is e to, (e) (e.1) What is a pure strategy for Player 1 in /? (e.2) What is a pure strategy for Player 2? [You are free to state your answers in words, rather than in mathematical notation; but, in either case, your answers should be explicit and complete. ] (e.3) Give an example of a pure strategy for Player 1 and a pure strategy for Player 2 in the special case where each effort level must be chosen from the set (3,4), that is, when Grey,d, E (3,4). (1) Completely describe all pure strategy subgame perfect equilibria of I when G,e, = [0,10] (instead of [0. )) and 5, =[0, 10 - e,] (instead of [0, c0)).1 Subsidies and Incidence (2014 PS3) 1. Consider the labor market for high skill workers characterized by the following supply and demand: S(w) = -50 + 5w D(w) = 1000 - 10w (a) Calculate the equilibrium wage in this market. Draw the supply and demand curves on a graph, and calculate worker and employer surplus. [4 points]12. Assuming the market for loanable funds is in equilibrium, use the following numbers to determine the quantity of loanable funds supplied. GDP $8.7 trillion Consumption Spending $3.2 trillion Taxes Net of Transfers $2.7 trillion Government Purchases $3.0 trillion a. $2.2 trillion b. $5.2 trillion C $2.5 trillion d. $3.9 trillion 13. An economic contraction caused by a shift in aggregate demand causes prices to a. fall in the short run, and fall even more in the long run. b. fall in the short run, and rise back to their original level in the long run. c. rise in the short run, and fall back to their original level in the long run. d. rise in the short run, and rise even more in the long run. 14. An MP3 player in Singapore costs 200 Singaporean dollars. In the U.S. it costs 100 US dollars. Which of the following is correct? a. if the nominal exchange rate is 1 Singaporean dollars per U.S. dollar, purchasing power parity holds. b. if the nominal exchange rate is 2.0 Singaporean dollars per U.S. dollar, purchasing power parity holds. c. if the nominal exchange rate is .50 Singaporean dollars per U.S. dollar, purchasing power parity holds. d. purchasing power parity does not hold at any of the above exchange rates.15. MS P2 MD2 AD MD Refer to the above figure. On the left-hand graph, MS represents the supply of money and MD represents the demand for money; on the right-hand graph, AD represents aggregate demand. Assume the money market is always in equilibrium, and suppose r = 0.083my = 0.12; Y = 13,000; Yz = 10,000; P, = 1.0; and P2 = 1.2. Which of the following statements is correct? When P = Pr. a. nominal output is higher than it is when P = P b. investment is lower than it is when P = P. c. the velocity of money is higher than it is when P = P1. d. the expected rate of inflation is higher than it is when P = P. 16. In the former Soviet Union, producers were paid for meeting output targets, not for selling products. Under those circumstances, what were the economic incentives for producers? a: to produce good quality products so that society would benefit from the resources used by to produce enough to meet the output target, without regard for quality or cost to conserve on costs, so as to maintain efficiency in the economy d. to produce those products that society desires most 17. One bag of flour is sold for $1.00 to a bakery, which uses the flour to bake bread that is sold for $3.00 to consumers. A second bag of flour is sold for S'to a grocery store who sells it to a consumer for $2.00. Taking these four transactions into account, what is the effect on GDP? a. GDP increases by $3.00. b. GDP increases by $7.00. GDP increases by $5.00. GDP increases by $6.00. 18. Suppose the MPC is 0.9. There are no crowding out or investment accelerator effects. If the government increases its expenditures by $30 billion, then by how much does aggregate demand shift to the right? If the government decreases taxes by $30 billion, then by how far does aggregate demand shift to the right? a. $300 billion and $300 billion $300 billion and $270 billion $283 billion and $283 billion d. $283 billion and $254.7 billion