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Caribbean economies are said to be very vulnerable. Globalization has brought us closer as a world than we ever were before. Its benefits are experienced by all, but its challenges seem to way heavier on certain economies. Turks and Caicos Islands is no exception as a British Overseas Territory (BOT). The islands enjoyed surplus balance of payments until 2020. The Government of the Island (TCIG) opted to borrowed USD$80 million from the Trinidad and Tobago based Republic Bank Limited (RBL).

Discuss FOUR (4) internal factors, with illustrating examples, that hinder economic development within the Turks and Caicos Islands. (16 marks)

Identify and explain THREE (3) challenges that Globalization, with illustrating examples, poses to Turks and Caicos Islands. (12 marks)

Explain the reason why the TCIG opted to borrow money from a regional commercial bank to weather the early effects of the pandemic. (8 marks)

Discuss how imperialism (identifying any imperial relations) can inhibit the economic growth and development of Turks and Caicos Islands. (4 marks)

(24 points total. 6 points each part) Suppose the Beer industry (good X) is characterized by Monopolistic Competition in both the Home and Foreign country. The different producers offer differentiated products based on the tastes of their beer. Otherwise, the beer producers are in all ways identical. They each face a linear demand curve of the type described in Lesson 8: for any firm i. Fixed Costs are F=$10M, Marginal costs are constant C=$20 per keg. b=.01. The size of the home market is 10M kegs, and foreign is 25M kegs. [Review your Lesson 8 notes/videos for details on the terms of the equation in addition to how to solve the problem.]

How many firms will produce in the home market in autarky? How much output for each firm? What is the price per keg of beer? How many firms will produce in the foreign market in autarky? How much output for each firm? What is the price per keg of beer? (If your answer is not a round number, round DOWN to get n. Fractions of a firm don't make sense.) Why should we only round n down in problems like this rather than follow conventional rounding rules? Explain in a short paragraph. How many firms will produce in equilibrium when the countries open for trade? How much output for each firm? What is the price per keg of beer?

the quantity of customers served by Matt - the customer demand function for Matt's restaurant - was QM = 44 - 2PM + PS and the quantity of customers served by Sean was QS = 44 - 2PS + PM. The profits for each restaurant also depend on the cost of serving each customer. Suppose that Matt is able to reduce his costs to just $2 per customer by eliminating the wait staff. Suppose that Sean continues to incur a cost of $8 per customer.

a.) What is Sean's profit function, S?

b.) What is Matt's profit function (revenue per customer multiplied by number of customers), M?

c) Sean needs to choose his price to maximize his profit function. What is Sean's best response function?

d) Matt needs to choose his price to maximize his profit function. What is Matt's best response function? Explain what this best response function means.

e) Calculate the Nash equilibrium

f) Graph the two best response functions and indicate the location of the Nash equilibrium on the graph. To match what we did in class, plot Matt's price on the vertical axis and Sona's price on the horizontal axis.

g) Look at the graph of the best response functions that we came up with in class when the cost per consumer was $8 for both Matt and Sean. Indicate which best response function in your new graph has moved and by how much. Explain why these changes occurred in your graph.

Suppose that there are two food stores in town. La Boulangerie sells bread and La Fromagerie sells cheese. It costs $1 to make a loaf of bread and $2 to make a pound of cheese. If La Boulangerie's price is PB dollars per loaf of bread and La Fromagerie's price is PF dollars per pound of cheese, their respective weekly sales, QB thousand loaves of bread and QF thousand pounds of cheese, are given by the following equations:

QB = 14 - PB - 0.5PF

QF = 19 - 0.5PB - PF

a.) What are profit functions for La Boulangerie, B, and La Fromagerie, F?

b.) What are the best response functions in terms of setting the prices for La Boulangerie and La Fromagerie?

c.) Graph the respective best-response functions. Plot La Boulangerie's price on the vertical axis and La Fromagerie's price on the horizontal axis.

d.) Calculate the Nash equilibrium

Rather than setting their prices independently, suppose now that the two stores collude to set prices jointly so as to maximize the sum of their profits. Over the next few questions, we are going to find the joint profit maximizing prices for the stores.

e.) Start by identifying the profit function that captures the sum of the profits for the two stores i.e. J = B + F.

f.) What price should the two stores set for La Boulangerie? In other words, what PB maximizes the joint profit function? This looks a little trickier because the joint profit function, if you've calculated it correctly, has two squared terms in it instead of one. Think about it this way, though. Recall that the generic quadratic equation looks like y = ax2 + bx + c. In this part of the question, the x we're interested in is PB. Any term in our joint profit function that doesn't have some kind of PB in it is just part of the constant, 'c'. The 'x' that maximizes 'y' is still -b/2a. With this in mind, what is the best response function for the price set by La Boulangerie, PB?