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A firm had sales revenue of $1 million last year. It spent $600,000 on labor, $150,000 on capital and $200,000 on materials. What was firm's accounting profit?
You buy causes an 8% increase in quantity demanded of that product, will another 10% decrease in the price cause another 8% increase in quantity demanded?
Compare the marginal utility of the two goods and the relative prices at the optimal choice to see if the expected relationship holds.
What assumptions does the model of intertemporal choice make that are not likely true in the real world and would make the model harder to use in practice?
Think about the backward-bending part of the labor supply curve. Why would someone work less as a result of a higher wage rate?
If one of the goods you buy has a negative income elasticity, that is, it is an inferior good, what must be true of the income elasticity of other good you buy?
Explain in terms of diminishing marginal utility why the Washington monument strategy is so misleading.
Think back to a purchase that you made recently. How would you describe your thinking before you made that purchase?
According to the model of intertemporal choice, what are the major factors which determine how much saving an individual will do?
What are the major factors which determine how much saving an individual will do? What factors might a behavioral economist use to explain savings decisions?
What is the rule relating the ratio of marginal utility to prices of two goods at the optimal choice?
If people do not have a complete mental picture of total utility for every level of consumption, how can they find their utility-maximizing consumption choice?
How decrease in expected interest rates over working life affect one's intertemporal budget constraint? How would it affect one's consumption/saving decision?
How would an increase in expected income over one's lifetime affect one's intertemporal budget constraint? How would it affect one's consumption decision?
Calculate marginal utility for income and for leisure. Now, start off at the choice with 50 hours of leisure and zero income, and a wage of $8 per hour.
Show graphically how your budget constraint is affected. Assuming you only buy normal goods, what would happen to your purchases of goods?
Explain all the reasons why a decrease in the price of a product would lead to an increase in purchases of the product.
What if the policy goal is to raise wages for this group? Explain your answers with supply and demand diagrams.
Say that a certain stadium for professional football has 70,000 seats. What is the shape of the supply curve for tickets to football games at that stadium?
Sketch a supply and demand diagram, paying attention to the appropriate elasticities, to illustrate that demand for these paintings will determine the price.
The equation for a supply curve is 4P = Q. What is the elasticity of supply as price rises from 3 to 4? What is the elasticity of supply as the price rises?
The equation for a demand curve is P = 2/Q. What is the elasticity of demand as price falls from 5 to 4?
The equation for a demand curve is P = 48 - 3Q. What is the elasticity in moving from a quantity of 5 to a quantity of 6?
Suppose you could buy shoes one at a time, rather than in pairs. What do you predict the cross-price elasticity for left shoes and right shoes would be?
Think about products that would fall into each category. Can you come up with a name for each category?