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What is the equilibrium in this case? What (if anything) would be the equilibrium if firms had Bertrand conjectures throughout?
What will be the outcome of the distribution system in part (c) if phiffle can be resold? (Assume that consumers in this economy are very savvy folks.)
Assume the monopoly charges retailers according to simple linear prices - at a price the monopoly sets. What is the optimal price for the monopoly to set?
Suppose the N firms are numbered 1, 2, ... , N, and 'they have the following sort of conjectures. What happens to price as N goes to infinity?
ne-quarter of the workers are qualified to work only in the low-wage industry. Find all of the pairs (yH , yL ) that can occur in this economy.
What fraction of the money transferred accrued to the people in each group under the old program, and what fraction accrues under the new program?
Historical Immigration Patterns and Real Wages. Draw demand and supply graphs to show what happened to wages in Europe.
Find the Nash equilibrium for any R between 0 and 10. Find the expected profits of the owner and the agent for any R.
What is the average daily output of the firm's workers? What is the average daily output of the firm's workers after the buy-out?
Also, assume that prices must be expressed in dollars and cents, so that $4.07 is an admissible price but $4.065 is not. What is the Bertrand equilibrium?
Consider again the situation described above, but now imagine that each firm sets a price, selling as many units of the good. What is the Bertrand equilibrium?
Find the Cournot equilibrium. Determine whether the price at which the goods are sold exceeds marginal cost.
Show that any risk averse expected utility maximizer will (weakly) prefer p' to p. Can you supply a general statement of principle at work in specific example?
That is, the consumer's investment problem has a well-defined solution. Even if you can't do part (a), assume its result and go on to parts (b) and (c).
Prove that if we have two risky assets with independent return distributions, all the results obtained in the text for the case of one risky asset extend.
Suppose the consumer is sure to receive an extra $34 tomorrow. What consumption level does he choose today, and what is his overall expected u tility?
Which of the three gambles given is best for this consumer (granting the validity of all her judgments)?
Suppose that a social dictator has social welfare functional of the following form. What will be the welfare optimum plan chosen by this social planner?
Find the level of the tax rate that ensures the socially optimal amount of gadgets will be produced in a competitive equilibrium.
Without government intervention, what would be the equilibrium amount of chocolate produced? What is the socially optimal amount of chocolate production?
Why would a toll charge of $5 per vehicle lead to an economically efficient amount of traffic?
Explain how costless bargaining will lead to a socially efficient outcome, regardless of whether the property rights are owned by the community or the producer.
Provide an argument that the Coase Theorem holds in this situation. Provide an argument that the Coase Theorem holds in this case.
What would the Coase Theorem imply about the outcome of bargaining between the town and the factory owner?
If the socially efficient level of backhoes is Q* =12, find the tax that induces the socially efficient level of backhoes in equilibrium.