Q1. Assume that serendipity bank has overload reserves of $8000 and checkable deposits of $150,000. If preserve ratio of 20%, what is the size of the banks actual reserves?
Q2. What is the marginal rate of substitution (MRS) and why does it diminish as the consumer substitute's one product for another? Use examples to illustrate.
Q3. Suppose a monopolist can purchase Labor at a price w = 36 and can purchase Capital at a price r = 25. The monopolist's production function is given by Q = L1/2K1/2. The demand facing the monopolist is given by P = 180 - 3Q.