separate graphs as a function of w. (i) Describe a hypothetical situation in which periods of low inflation can be used to estimate the effects of eliminating usury laws (a price ceiling on interest rates) for similar values of real interest rates without low inflation. Be as specific as possible in terms of the estimation you would run in terms of the counterfactual implicit in such an estimation. Explain graphically how such a comparison is consistent with economic theory. How do mortgage lenders typically ration credit when price ceilings bind? (j) Lets suppose that a firm owns a proven oil reserve of k units which cannot be transferred and a technology for producing oil from reserves of y = kj. You own a fixed amount of non-resaleable reserves k. Suppose the price of oil is constant the interest rate (1+r)=1.03 and the oil expires after 2 periods. Solve for efficient use of oil over two periods. Suppose that an outside policy maker wants to reduce current oil production. Can they do that with a constant tax on oil production? What must be true of any of tax profile which accomplishes the policy makers goal? [A tax profile is a set of time specific marginal tax rates.] Suppose instead the production function equals y = ki - 1 for any y > 0 but is equal to zero for no production. How do your answers to the above change? (k) Derive the isoquant for a firm that has two inputs which are perfect compliments. Use this to solve for the firm's cost minimizing input bundle and in terms the cost function c(y). Repeat for a firm that has a perfect substitute technology for producing output. You should be able to due this for any preferences within these classes and your answer should have a specific, though not-necesarily, polynomial analytical form. (1) Given our discussion in class about eyeglasses and correcting for any typos in the slides, we can speculate about another similar historical event. In 1977, the Supreme Court ruled that indi- vidual states could not ban lawyers from advertising either their availability or their prices. Unlike with eyeglasses, all states had previously enacted a ban. What do you think was the effect of this decision on (long run) legal foes