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Define the cross-price elasticity of demand. Give an example with negative cross-price elasticity, another with zero cross-price elasticity.
If the government decided to impose a 50% tax on gray T-shirts, would this policy generate a large or small increase in revenues?
Over that range of prices, does the business face elastic, unitary, or inelastic demand?
At a price of $200, a cellphone company manufactures 300,000 units. At a price of $150, company produces 200,000 phones. What is the price elasticity of supply?
Determine the income elasticity of demand for eating out and for having frozen lasagna dinners.
A local golf course is considering lowering its fees in order to increase revenue coming in. Under what conditions is fee reduction going to achieve its goal?
Are price gouging laws an example of a price floor or a price ceiling? Does a binding price ceiling cause a shortage or a surplus?
Would you expect quarterly US real GDP series to be stationary? Why or why not?
Now regress S1 on s2. What does this regression connote? How does this exercise differ from the one we discussed in this chapter?
A priori, would you expect the two time series to be cointegrated? Why? What does trade theory have to say about the relationship between the two?
Suppose you want to forecast employment at the national level. Collect quarterly employment data and develop suitable forecasting model using ARIMA methodology.
Develop a suitable ARIMA model to forecast the labor force participation rate for females and males separately.
Collect data on housing starts and develop a suitable ARIMA model for forecasting housing starts. Explain the procedure step by step.
Suppose you find two cointegrating relationships. How do you interpret them? Would you have to include one or two error correction terms in estimating the VAR?
If you want to take into account some of these variables in the wage function, estimate your model, paying due attention to the problem of endogeneity.
State your reasons why you think that a standard logit or probit model is sufficient without resorting to IV estimation.
The lingering recession calls for an expansionary fiscal policy that advocates increases in government expenditures and/or decreases in taxes.
How would you use IV to obtain consistent estimates of the parameters of the two models? Show the necessary calculations.
What happens to price and quantity when supply and demand change at the same time?
Explain how the market works. In your explanation, be sure to illustrate how increasing global demand for oil has impacted the equilibrium price.
Which type of oligopoly behavior best explains this situation? Should it change the price it charges when its marginal costs change a little?
Describe what happens to your budget constraint if the price of one item in your budget becomes less expensive. Show this on a graph.
Draw Kate's budget constraint. If espresso goes on sale for $2 a cup, what does her new budget constraint look like?
Explain why many seniors often earn lower grades in their last semester before graduation. What is the opportunity cost of reading this textbook?
By referencing events in the news or something from your personal experiences, describe one example of each of the five foundations of economics.