Now assume there is production in the economy. What is the relation between the marginal rate of substitution and the marginal rate of transformation in a general competitive equilibrium? Derive such relation and explain the intuition behind it.
Q: Consider the following graph. Suppose the economy is currently at point A. Suppose there is a…
A: "As the question number is not specified, we can provide a solution to the first question. Kindly…
Q: Suppose that the seitan industry is initially operating in long-run equilibrium at a price level of…
A: This can be described as a form of market in which no single producer or consumer has the power to…
Q: LRAS1 and SRAS1 denote LRAS and SRAS in year 1, while LRAS2 and SRAS2 denote LRAS and SRAS in year…
A: The Aggregate Demand and Supply (AD-AS) model is a macroeconomic model that illustrates the…
Q: Which of these is likely to be an effect of advertising? Shifts out the demand curve Shift out the…
A: Advertisement is a form of promotion of a particular product. As the markets are facing enormous…
Q: 3. If at a given real interest rate desired national saving is $120 billion, domestic investment is…
A: A financial market where people, companies, and governments come together to lend and borrow money…
Q: 5 3 A H B D C E G D 2 6 10 12 Qua If buyers in this market have to wait in lim imposed, each buyer…
A: Price ceiling is a situation when the price charged is more than or less than the equilibrium price…
Q: There is increasing scientific evidence that climate change caused by human actions has…
A: Thе cap-and-tradе systеm is considеrеd a markеt-oriеntеd approach to еnvironmеntal rеgulation,…
Q: Question 1a) Carefully define the concept of contract curve. Given an exchange economy with two…
A: We are discussing the concept of a contract curve in the context of an exchange economy with two…
Q: 1) At an output level of $400 billion, there is an unplanned inventory change of All Numbers are in…
A: In terms of its ability to alleviate economic downturns through government intervention,…
Q: (4) Assume that the market demand and cost of the Cournot Duopolists are P = 100 -0.5 (q +9₂),…
A: Profits are defined as the revenue earned over and above the cost that is incurred in production of…
Q: What is the difference between univariate and multivariate analysis? Give an example for when a…
A: In the most general sense, analysis is the process of breaking a complex whole into simpler parts to…
Q: Loessing Compan produced and sold 12,000 units last year with sales price of $45 per unit and unit…
A: Since all direct expenses have been deducted from sales, contribution seems to be the amount of…
Q: A well-implemented environmental policy should Question 1Answer a. provide opportunities for…
A: A well-implemented environmental policy is a set of guidelines and regulations that are effectively…
Q: Refer to the figure. How much is t 4000 O O 0 2000
A: The fixed cost refers to cost that does not change with change in level of output. It is not…
Q: Suppose that QD = 100-P and Qs = P. Which of the following characterizes deadweight loss as a…
A: Demand equation: Supply equation: A price floor is set at .A price floor is the minimum price at…
Q: (1) What is the quantity the monopolist will produce? (2) What is the quantity supplied to Class 1?…
A: Monopoly market structure is defined as the one in which there is single seller in the market. The…
Q: Consider an economy characterized by a Cobb-Douglas production function Y = Y = AK "L¹-a, with A =…
A: A production function:Is a function that shows the relationship between the input and output of the…
Q: If price is set at $11 in the market shown in the graph, consumer surplus will consist of areas:…
A: Consuemr surplus is the difference between the maximum price that the buyer is willing to pay and…
Q: 1. Suppose that the Marginal Abatement Cost function and the Marginal Damage function for an…
A: The objective of the question is to understand the concept of Marginal Abatement Cost (MAC) and…
Q: Consumer surplus is defined as: the difference between the market price and the marginal cost of…
A: In simple terms, the consumers on most occasions receive an additional benefit from purchasing a…
Q: Andrew has the following labour supply curve: lars per hour) Labour Supply ?
A: Income effect refers to the change in demand for a good or service caused by a change in the…
Q: Not yet answered Points out of 1 Flag question The seasonally adjusted data below depict the…
A: Macroeconomic analysis provides a broad view of the financial landscape of entire economies. It…
Q: An economy has the per-worker production function y = Akcx where y is output per worker and k is…
A: Solow growth model says that an economy can achieve a steady state of growth through a combination…
Q: Suppose a price ceiling of P2 is imposed on the competitive market depicted in the figure. Which…
A: The price ceiling is the maximum price that can be charged to buyers. The seller cannot fix a price…
Q: A recognized pharmaceutical company buys and sells a dangerous chemical. This substance is purchased…
A: Cost can be defined as a concept that shows the amount of expenditure and any other sacrifice such…
Q: Professor Petro considers coffee from La Prep (denoted as good !) and coffee from Tim Horton's…
A: Utility FunctionU(l, h) = 4l + hl & h are 2 types of coffeeBudget m = 60PricesPl = 3Ph = 1.5
Q: K- in the table, if the marginal factor cost is 1480, how many workers would be hired? OA 6 OB. 5…
A: Production function:Production is a function of land labor capital and entrepreneurship. It includes…
Q: A labor saving device system save $2,000 per year for five (5) years. It can be installed at a cost…
A: The rate of return (RoR) measures an investment's performance or profitability over a given time…
Q: (Figure: Representative Firm) The figure shows the cost curves for a representative firm. At an…
A: Fixed costs don't change based on the volume of sales or output. The number of products or services…
Q: Comment critically on the reasons why companies are reluctant to implement employee wellbeing…
A: Employee well-being initiatives refer to a set of proactive and supportive measures implemented by…
Q: 5. Assume that relative purchasing power holds and that the inflation rate between year 1 and year 2…
A: The ability to purchase goods and services is known as purchasing power.
Q: How to calculate NDF PNL in USD given entry price, notional and fixing price. You bought 10mm USDCNY…
A: Given the information you provided:Entry Price (USD/CNY) is 7.00Fixing Price (USD/CNY) is…
Q: Whenever real GDP exceeds planned aggregate spending: households decrease consumption, decreasing…
A: Gross domestic product is the summation of a country's final goods and services. An increase in GDP…
Q: Suppose that inverse demand is given by P = 100 – 2QD and inverse supply by P = 25+Qs. Which of the…
A: Equilibrium in the market is determined at the point where the demand and the supply curve…
Q: Refer to the figure at right showing the market for olives. The loss of consumer surplus associated…
A: In the given diagram, the economy shown is open to the international trade of olives. The world…
Q: What adjustments should be anticipated in the long run and how would you calculate the new optimal…
A: Perfectly competitive market is one type of market in which many buyers and sellers are there and…
Q: Acme Pharmaceutical Company discovers a vaccine that prevents the common cold and has a patent that…
A: A monopoly firm operates in 2 markets:North AmericaEuropeCostsMC=$10No Fixed CostsDemand functionsQE…
Q: During an exam week, students flock to the stores to buy more espresso. As a result, the A…
A: The link between the amount of a product provided and its price, while maintaining other variables…
Q: Suppose that in the year 2015, Oceanaire, Inc. planned to produce 525,000 units of its lightweight…
A: Planned investment implies the intentional, strategic spending by businesses or individuals on…
Q: Predict how possible changes in monetary and/or fiscal policy may impact the supply and demand of…
A: Monetary PolicyMonetary policy refers to the actions undertaken by a country's central bank or…
Q: Which of the following graphs shows the correct effect on the consumption function when taxes…
A: Macroeconomic research provides a comprehensive forecast for the fiscal landscapes of entire…
Q: Exhibit 23-8 Price and Cost (dolars) Price and Cost (dalan) 11 10 ATC 8 ** AVC 7 11 10 0 70 90 100…
A: In perfect competition, There exists a large number of buyers and sellers. The firm will produce…
Q: The following is a table of the total cost (TC) of producing output Q for a particular firm. Based…
A: A table consists of quantity and total cost for a firm is provided. It is represnted in the table…
Q: Country X Price Qdd Qsd 440 390 340 290 240 $7 6 5 4 3 240 290 340 390 440 The accompanying table…
A: The accompanying table for country X is given as follows. PriceQuantity DemandedQuantity…
Q: 3. Burger Prince is considering opening a new restaurant in Colton, Loma Linda, Upland. The…
A: Comparative advantage is an economic principle that suggests it is more efficient for each party…
Q: Assets Loans: $155,000 Required Reserves: $40,000 Excess Reserves: Liabilities Checking Deposits:…
A: Banks promote a mutually beneficial relationship between people saving money and those investing by…
Q: The accompanying diagram shows the demand, marginal revenue, and marginal cost of a monopolist.…
A: Deadweight loss refers to the inefficiency or loss occurs in the market due to some measure like…
Q: 1. A company believes that the demand curve for its products is given by: P = 20 - 0.1Q, for Q≤ 50…
A: A demand curve shows the relationship between the price of a good and the services and the demand…
Q: 10. Questionable business practices according to antitrust agencies Complete the following table by…
A: Pricing alludes to the most common way of setting a worth or monetary sum for a product or service…
Q: Suppose that the government establishes a price ceiling of $3.70 for wheat. What might prompt the…
A: Price ceiling refers to a type government policy that fix the maximum price that can be charged for…
Now assume there is production in the economy. What is the relation between the marginal rate of substitution and the marginal rate of transformation in a general competitive equilibrium? Derive such relation and explain the intuition behind it.
Step by step
Solved in 3 steps with 3 images
- Assume that you are studying an economy which produces two goods, x and y, using two factors of production, capital K and labour L. The economy’s overall quantities of the two factors are given, and the capital intensity (the capital-to-labour ratio) in the production of y is always higher than the capital intensity in the production of x. At present there is an excess supply of y. Explain and illustrate graphically what will happen in the long run to:1) Prices of goods and production.2) factor prices and factor use intensities in each sector.5. Suppose food (F) and clothing (C) are produced using only labor. The production functions are given by: F = (LF)0.5 C = 0.5(Lc)0.5 Where LF is labor devoted to food production and Lc is labor devoted to clothing production. Labor supply is fixed at 100. Suppose society's preferences can be represented by: U(F,C) = (FC)0.5 Solve for the equilibrium outputs of food and clothing and for the relative price of food (PF/ Pc). LF + Lc = 100Consider the production function of a competitive economy: F (K, L, A) = min (K"L1-a, A), Where K is capital, L is labor, a is some number between zero and one, and A is air. + Capital, labor, and air are in fixed supply. - 1. Give an intuitive explanation of this production function. What role does air play? How does air affect the level of production? 2. Write out the formula for the equilibrium price of capital, labor, and air. 3. Is air necessary for production? Explain how air in this economy could be free despite being a necessary input into the production process? t
- In the Heckscher-Ohlin (H-O) model, Explain with the help of a graph the effect of an increase in the relative price of a labor-intensive good on input choice.Can we determine if point F is allocatively efficient? If so, is it allocatively efficient?Suppose pigs (P) can be fed corn-based feed (C) or soybean-based feed (S) such that the production function is P=2C+5S. If the price of corn feed is $4 and corn feed is on the horizontal axis, and the price of soybean feed is $5 and soybean feed lies on the vertical axis, what is expansion path? the horizontal axis Oa. Ob. Oc. S=2C/5 C. d. C=5S/2 the vertical axis
- In what sense is a competitive equilibrium a good or bad thing for a given economy?Florida citrus growers say that the recent crackdown on illegal immigration is increasing the market wage rates necessary to get their oranges picked. Some are turning to $100,000 to $300,000 mechanical harvesting machines known as “trunk, shake, and catch” pickers, which vigorously shake oranges from the trees. If widely adopted, how will this substitution affect the demand for human orange pickers? What does that imply about the relative strengths of the substitution and output effects?Question 13 5 pts For the production function y = 4x1+ 3x2, which of the two inputs is more productive when x1 is 10 and x2 is 10? X1 X 2 neither; for this situation, they have equal marginal products cannot tell from the above information Question 14 5 pts Given the production function y = x1 1/3 x,1/3, what is the marginal physical product of x2 when x1 is 5 and x2 is 5? O 0.75 37 0.19 O 1.11
- Explain the absence of economic profit in a purely competitive, static economy. Realizing that the major function of profit is to allocate resources according to consumer preferences, describe the allocation of resources in such an economy.Microeconomics 2 - Factor Market - Pareto Optimum Consider an economy in which only 2 factors are capital (K) and labor (L) whose total supply is 100 labor and 100 capital. They are used by only firm that produces only 2 final goods X and Y. The technology describing the production process of each of goods is described by the following production functions: X = 5 Lx + 3 Kx and Y = 1/3 Ly Ky It’s known that the factors have been allocated in such a way that the initial endowment is: Kx = 75; Lx = 85; Ky = 25 and Ly = 15. With these data we ask: Obtain the contract curve corresponding to the production of this economy. Does the starting point constitute a PARETO OPTIMUM? Represent the available information in an Edgeworth Box. Obtain the production possibilities frontier (PFC) curve. Locate the initial endowment THANKS :DDiscuss the impact of rational self-interest on each of the following decisions. Whether to attend college full time or enter the workforce full time Whether to buy a new textbook or a used one Whether to attend a local college or an out-of-town college (Production in the Short Run) Complete the following table. At what point does diminishing marginal returns set in? Units of the Variable Resource Total Product Marginal Product 0 0 — 1 10 — 2 22 — 3 — 9 4 — 4…