Kindly help in solving the following questions and give explanations.
4. Assume that a firm's short run cost function is C(q) =100q-4q' +0.2q' +450. What is the firm's short run supply curve?? If price is p=115, how much output does the firm supply? 5. Each firm in a competitive market has a cost function of C(q) = q-q' + q . There are an unlimited number of potential firms in this market. The market demand function is given by Q=24- p . Determine the long run equilibrium price, quantity per firm, market quantity and number of firms. How do these values change is a tax of $1 per unit is collected from each firm? 6. Assume that the inverse demand function for cheese is Q=100-10p and the supply curve is Q=10p. a. [Easy] What are the effects of a specific tax of $1 per unit on the equilibrium quantity and price, government tax revenue, consumer surplus, producer surplus, welfare and DWL? b. [Harder] What are the effects of a specific subsidy (negative specific tax) of $1 per unit on the equilibrium quantity and price, government tax revenue, consumer surplus, producer surplus, welfare and DWL? c. [Hard] The government, instead of a tax or subsidy, imposes a price support (minimum price) of $6. The way this is implemented is via a deficiency payment. This means the government will guarantee producers a price of $6 and the producers choose their output accordingly. They then sell that output to consumers at whatever price consumers are willing to pay for that total output (not $6!!!). The government pays producers the difference between the $6 dollars and the price consumers are willing to pay for all units produced. This payment is called the deficiency payment. What is the quantity supplied, the price that clears the market and the deficiency payment? What effect does this program have on consumer surplus, producer surplus, welfare and deadweight loss? d. [Medium hard] Now instead of any of the policies above, the government imposes a price ceiling of $3. That is it. Price is not allowed to rise above $3. How does equilibrium change (price and quantity)? What effect does this price ceiling have on consumer surplus, producer surplus and deadweight loss?Fed keeps policy unchanged, but inching closer to rate hikes WASHINGTON (AP) April 20, 2021 As widely expected, the Federal Open Market Committee {FOMC} decided to push its target range for the fed funds rate between 0.00% and 0.25%. The Fed's monthly purchase rate for Treasury securities and mortgage-backed securities was announced at $80 billion and $40 billion, respectively, a level higher that exceeds anticipated demand for loanable funds. The Fed's released announcement stated "The Federal Reserve will continue to purchase securities and bonds until substantial further progress has been made toward the Committee's employment goals.\" But Fed watchers anticipate a quick return to more neutral monetary policy if there is a strong economic recovery in 2021. 5A. From information in the article, state the two specic monetary tools the Federal Reserve is using to conduct monetary policy. SB. Depict the US. money market. Indicate initial supply, demand, and equilibrium price and quantity with subscript \"1". Return to the money market in SA, and change the market consistent with information in the article. Indicate new supply, demand, and equilibrium price and quantity with subscript \"2\". 5C. Beginning with changes in the money market, set out two intended causal chain effects on the economy from the announced actions of the Federal Reserve. 5D. Using a Keynesian Macro Model, show the theorized effect of the decisiOn of the Federal Reserve on the U.S. economy. Question (3) [10%] Please briefly explain the following: a. Explain why there is a negative relationship between the amount of money you hold and the interest rate, thus money demand curve is downward sloping. (5%) b. Please describe a situation when the money demand curve would shift to the right. (5%) Question (4) During the 2008/2009 Financial Crisis in the U.S., the Fed (Central Bank of the U.S.) had cut interest rates across the board (in the following graph, we use the time-series data of the effective federal funds rate as an example). (Q4a-5%) Please write down the Fed rule and explain briefly the different factors that may affect the Fed's interest rate decision. (Q4b-10%) Please identify the FOMC press release from January 22, 2008. What was the Fed's action on interest rate on that day? Which factor(s) were cited in the Fed's decision to do so? [Hint: FOMC press release accessed at https://www.federalreserve.govewsevents/pressreleases/monetary20080122b.htm/ FRED - Metin Factoral Fast Rats Parent 3002 204 3012 201 1 (Q4b-15%) After year 2016, the Fed decided to raise interest rate gradually (see the figure above). Based on the course materials, please list out the three traditional monetary policy tools that the Fed can use to control the interest rate via changing the money supply. /Hint: You have to be precise about the directions of the policy changes that are consistent with the interest rate trends during 2016-2018. For example, if open market operations, whether it should be purchase OR sales of the bonds)
