We’ll look at a capital market now. Say that the relationsh…
We’ll look at a capital market now. Say that the relationship between the quantity of capital supplied and the interest rate is described by the equation qS = 8 + 100r, while quantity demanded is described by the equation qD = 20 – 100r. In equilibrium, the interest rate is r0* = [r0], rounded to two decimal places. (Don’t include a leading zero here — for example, input .09 instead of 0.09). The amount of capital lent is q0* = [q0]. The federal government decides that interest rates are too high, and they impose an usury law. Rates may be no higher than .04. Does supply or demand dictate the amount of capital lent now? [supply]. (Type either “supply” or “demand” without the quotes). The amount of capital now lent is q1* = [q1].
Read DetailsIn this problem, we analyze production planning in two diffe…
In this problem, we analyze production planning in two different types of widget markets. In one city, widget production is split across many different manufacturers: these firms are in perfect competition with one another. Here, marginal revenue per widget is constant at $4 (displayed on the left half of the marginal revenue column below). In another city, a single firm handles widget production, and constitutes a monopoly. Marginal revenue is decreasing, as shown in the right half of the marginal revenue column below. # of workers total product marginal revenue 1 12 $4 / $4 2 22 $4 / $4 3 31 $4 / $3 4 38 $4 / $3 5 44 $4 / $2 6 48 $4 / $2 7 51 $4 / $1 8 52 $4 / $1 Let the wage in both markets be $18. How many workers does the firm in perfect competition hire? [wpc]. What are total profits? $[ppc]. How many workers does the monopolist hire? [wm]. What are total profits? $[pm].
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