22. Define the following:
Answer) Real interest rate:- A real interest rate is an interest rate that has been adjusted to eliminate the impacts of inflation to reflect the real cost of funds to the borrower and the real earnings to the lender or to an investor.
Nominal Interest rate:- A nominal interest rate pertains to the interest rate before taking inflation into account.
Monopsony:- A monopsony is a market condition in which there is only one buyer, the monopsonist.
Price taker:- Price taker is a firm that must accept the market price for its goods and services. Price taker does not have sufficient power to set its own price. This type of firms exists in perfect competition markets.
Price setter:- A price setter is a company that can charge a price it wants on its products.
22. Define the following: Product Market Factor Market Capital Marginal Factor Cost Value of Marginal Product...
2. Consider a downward-sloping market demand and an upward-sloping marginal cost. For each of the following situations, show the Social Marginal Benefit and Social Marginal Cost curves and explain whether the presence of the externality leads to a monopoly equilibrium with too much or too little production relative to the socially optimal outcome. (a) A negative externality associated with production (b) A negative externality associated with consumption (c) A positive externality associated with consumption.
We are considering a market with marginal cost of P=100+2Q and a demand of P=500-2Q. Use that information to answer the following questions. a. Find the market equilibrium (price and quantity in the market). b. Find producer and consumer surplus. c. Now imagine production of this good created a negative externality of 1$ per unit of output. Find the socially optimal outcome (price and quantity) taking this externality into account. d. Find consumer and producer surplus at the socially efficient...
marginal cost environmental justice free market environmentalism holdout effect free-rider effect marginal benefit equilibrium price positive externality economic efficiency negative externality welfare analysis Pigovian (pollution) tax We were unable to transcribe this image
Problem 2: Externality Consider the market for education. The marginal social cost of education (MSC) and the marginal private benefit of education (MPB) are given by the following equations where Q is the number of units of education provided per year. MSC 10+ Q MPB 100-Q You are also told that each unit of education provides an external benefit to society of $10 per unit. This external benefit is currently not being internalized in the market. a) Given the MSC...
18.)A profit-maximizing firm in a competitive market should stop employing additional units of a factor when a.)marginal revenue of the factor is maximized b.)price of the product is greater than the marginal cost of the factor c.)marginal cost of employing the factor is minimized d.)value of the marginal product of the factor equals the price of the factor e.)marginal product of the factor is maximized 19.)A firm in a competitive market will employ additional capital until its value of the...
Part I Suppose that in the market for paper, demand is P=100 - Q. The marginal private cost of producing paper is 10+ Q. However, pollution generated by the production process creates a per unit external harm (i.e., negative externality) equal to 0.5Q (i.e., the level of the externality increases with the quantity produced). 16+1,5 Q (Social cret) 10+Q (private 0 36 45 Top a) What is the (unregulated) market equilibrium and quantity if the externality is not corrected for...
3. Is monopolistic competition efficient? Suppose that a firm produces baseball bats in a monopolistically competitive market. The following graph shows its demand curve, marginal revenue (MR) curve, marginal cost (MC) curve, and average total cost (ATC) curve. Place a black point (plus symbol) on the graph to indicate the long-run monopolistically competitive equilibrium price and quantity for this firm. Next, place a grey point (star symbol) to indicate the minimum average total cost the firm faces and the quantity associated with...
Two thermic power plants have the following marginal and total cost of abatement of nitrogen oxide (NOx) emissions. When faced with no restrictions each of them emits maximum 100 ppm (parts per million) of NOx. Firm 1: MAC1=5 A1 TAC1=2.5 (A1)^2 Firm 2: MAC2 = 10 A2 TAC2= 5(A2)^2 (8 pts) The EPA finds the total NOx emissions of 200 ppm too much and seeks for improvement in air quality by specifying the reduction of 40% in total emissions from...
A dry-cleaning business operates in a monopolistically competitive market with the following demand and marginal revenue curves: P = 100–5Q TR = 100Q–5Q2 MR = 100–10Q The business’s total and marginal cost curves are: TC = 4Q + Q2 + 5 MC = 4+2Q where P is in dollars per unit, output rate Q is in units per time period, and total cost C is in dollars. a) Determine the price and output rate that will allow the firm...
8.) Derived demand is exemplified in which of the following? a.) The salary of computer techs rise, resulting in a decrease in supply and an increase in demand. b.) The salary of computer techs fall, resulting in an increase in supply and a decrease in demand. c.) Consumers want computers, so producers raise the price of computers. d.) Consumers want faster computers, so technology firms invest in capital and labor. e.) None of the above 9.) Demand for capital a.)...