below are the questionsss

The statistics from tradingeconomics.com (based on Statistics Canada numbers) below show the change in Canada's real GDP (first graph) and inflation rate (second graph). The yellowish bars in both illustrate how the Canadian economy has changed due to COVID 19. Canada GOP Growth Rate Ti-and Day |20osama Fus 15 Previous Canada Inflation Rate the Shot Down join-dom forum Create | Ristic MEHI Actionil 1. Use the information in these graphs to illustrate how the Canadian economy has changed due to COVID19, in the AS-AD model. Draw the curves before the pandemics and after the pandemics started. Make sure you get the correct directions in which the curves have shifted and clearly show how the equilibrium real GDP and the price level have changed. (4) 2. The government purchases of goods & services G actually decreased slightly due to the coronavirus shutdowns (mainly due to school closures and curtailed government administration). Does it mean that the budget deficit (G - 7) has decreased? Why or why not? (4)The statistics from tradingeconomics.com (based on Statistics Canada numbers) below show the change in Canada's real GDP (first graph) and inflation rate (second graph). The yellowish bars in both illustrate how the Canadian economy has changed due to COVID 19. Canada GOP Growth Rate Ti-and Day |20osama Fus 15 Previous Canada Inflation Rate the Shot Down join-dom forum Create | Ristic MEHI Actionil 1. Use the information in these graphs to illustrate how the Canadian economy has changed due to COVID19, in the AS-AD model. Draw the curves before the pandemics and after the pandemics started. Make sure you get the correct directions in which the curves have shifted and clearly show how the equilibrium real GDP and the price level have changed. (4) 2. The government purchases of goods & services G actually decreased slightly due to the coronavirus shutdowns (mainly due to school closures and curtailed government administration). Does it mean that the budget deficit (G - 7) has decreased? Why or why not? (4)19. Suppose the parameters of the IS curve are a, = 0, b = 0.5, r = 3% and the real interest rate is initially R = 3%. (a) Is the economy in its long-term equilibrium? Explain. (b) Suppose the real interest rate falls to 2 percent; what happens to the short-run equilibrium, holding everything else constant? (c) What happens to the short-run equilibrium if a falls 3 percent, holding everything else constant? (d) What occurs if the marginal product of capital rises to 5%? What would cause this to happen?19. Suppose the parameters of the IS curve are a, = 0, b = 0.5, r = 3% and the real interest rate is initially R = 3%. (a) Is the economy in its long-term equilibrium? Explain. (b) Suppose the real interest rate falls to 2 percent; what happens to the short-run equilibrium, holding everything else constant? (c) What happens to the short-run equilibrium if a falls 3 percent, holding everything else constant? (d) What occurs if the marginal product of capital rises to 5%? What would cause this to happen?Problem 3: Long-run equilibrium with heterogeneous firms (34 points) Consider the market for bicycles. There are two technologies used by firms in this industry: Technology 1 uses solar power, and has a cost function C(q) = q + 4q2 + 32 for q > 0. Technology 2 uses electricity from the grid and is more efficient, with a cost function C2(q) = q + 2q" + 32 for q > 0. Assume that we are in the long run, so firms using both technologies can shut down and leave the market at 0 cost, so that C(0) = 0 for both technologies. 1. (4 points) What are the marginal and average cost curves for each of these two technologies? In the long-run, assuming that firms can choose their technology, will any firms choose the solar technology (technology 1)? Why or why not? 2. (6 points) Find the individual supply curve of a firm operating Technology 2. 3. (4 points) Suppose that market demand for bicycles is given by D(p) = 820-40p. What will be the long-run price in the market? How much will each firm produce at this price? What will the total number of firms be? 4. (6 points) Now, suppose that the government offers solar subsidies to 10 bicycle manufacturers. These subsidies are for $28 and the manufacturers receive these subsidies as long as they produce a positive quantity of bikes with the solar technology (i.e. technology 1). What are new AC, MC, and supply curve for the solar technology with the subsidy? 5. (6 points) What will be the long run price now that there are the 10 bicycle manufacturers using technology 1 (assuming that there is still free entry for firms using technology 2)? What quantity will be produced by firms using technology 1 and 27 In equilibrium, how many firms using technology 2 will there be in the market? 6. (4 points) Will either type of firm make any profit in equilibrium? If so, how much will they make? If your results differ by firm, explain the intuition for why firms using some technologies make profits while others do not. 7. (4 points) Now suppose that the government increases the number of solar bike manufacturing subsidies it will give from 10 to 500. What is the new long-run price? How much will be produced by firms of each type? How many firms will there be of each type? Do any firms make profits? Problem 4: Consumer and Producer Surplus (16 points) Suppose the demand for apples is Q = 550 - 50P and the industry supply curve is Q5 = -12.5 + 62.5P. 1. (4 points) Calculate the equilibrium price and quantity. 2. (6 points) Compute the consumer, producer, and total surplus for this market. 3. (6 points) Suppose that the government gives producers a subsidy of $2 per bushel of apples sold. Draw the effect on the demand and supply curves, with quantity on the horizontal axis and the price paid by consumers on the vertical axis. Com- pute the new equilibrium price and quantity, the consumer and producer surplus, and the government expenditure on the subsidy. Compare the government ex- penditure with the increase in consumer and producer surplus.Problem 4 (40 points) (This is a somewhat mathematically involved problem. Please show your work, partial credit will be given) A firm has a Cobb-Douglas production function q = f(K, L) = Kall-a and faces wages, w, and rental rate of capital, r. 1. (3 points) Does this production function exhibit increasing, decreasing, or con- stant returns to scale? 2. (6 points) Find the short-run cost curve, C(q), as a function of q and the param- eters. 3. (6 points) For this subpart only, assume that K = 10, r = 1.5, w = 6, and o = 2/3. Derive expressions for MC, VC, FC, ATC, AVC, and AFC. Plot MC, ATC, AVC, and AFC, all on the same graph (using a graphing program -WolframAlpha, Mathematica, Matlab, etc.- is fine for this part). 4. (6 points) For this subpart only, assume that K = 10, r = 1.5, w = 6, and a = 2/3. Assume now that we know the market price is p = 18, which is fixed, and we are still operating in the short-run. What is the profit-maximizing choice of q? 5. (6 points) Solve for profits, a, as a function of market price, p (and the parameters w, r, K, a). Then, assume as we did in subpart 3 that K = 10, r = 1.5, w = 6, and a = 2/3, and continue to assume so until subpart 6 (included). Will profits ever be negative? If so, find the price range at which profits are negative. 6. (6 points) Is the firm better off shutting down (producing q = 0) at any positive low price? Explain. 7. (7 points) Going back to the original production function, let's think about the firm's problem in the long run. Find their optimal choices of inputs (as a function of q, w, r, a) and the resulting long-run cost function C(q). How does the firm's choice of L and K change if r goes up? What happens to costs?QUESTION TWO a. With example(s). explain cartels as collusive oligopolistic market. Discuss at least three circumstances under which cartels are most likely to be successful. [5 marks] b. Identify an oligopolistic industry in Ghana and describe its behavior in terms of number of firms, market share. [4 marks] c. Suppose Vobapine and Miton are two telecommunication firms that secretly collude to fix prices in a country. Each firm must decide whether to abide by the agreement or cheat on it. The payoff (profit in millions) matrix is given as: Miton Abide by agreement Cheat on it Abide by agreement 20, 20 12, 22 Vobapine Cheat on it 22, 12 14, 14 i. What strategy will each firm choose, and what will be each firm's profit? What are the Nash equilibria? [3 marks] ii. Is this game an example of the prisoner's dilemma? Explain [2 marks]QUESTION TWO a. With example(s). explain cartels as collusive oligopolistic market. Discuss at least three circumstances under which cartels are most likely to be successful. [5 marks] b. Identify an oligopolistic industry in Ghana and describe its behavior in terms of number of firms, market share. [4 marks] c. Suppose Vobapine and Miton are two telecommunication firms that secretly collude to fix prices in a country. Each firm must decide whether to abide by the agreement or cheat on it. The payoff (profit in millions) matrix is given as: Miton Abide by agreement Cheat on it Abide by agreement 20, 20 12, 22 Vobapine Cheat on it 22, 12 14, 14 i. What strategy will each firm choose, and what will be each firm's profit? What are the Nash equilibria? [3 marks] ii. Is this game an example of the prisoner's dilemma? Explain [2 marks]