CHAPTER 9—PERFECT COMPETITION HOME WORK 1. Market structure is determined by the a. volume of discounts‚ the quantity of foreign exchange‚ and the effects of Federal Reserve policy b. influence of government policy‚ the number of qualified buyers‚ and the effect of generally accepted accounting principles c. number of buyers and sellers‚ whether the product is standardized‚ whether there is free entry and exit‚ and how well informed the buyers and sellers are about the market d.
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Treasury yield curve is obtained from the prices of Treasury strips. Strips are essentially zero-coupon bonds which are traded for a variety of maturities. From the strip prices‚ you can directly obtain the yield curve. The spot rates are what are used to discount the future cash flows of bonds. Any coupon bond can be engineered from a portfolio of zero-coupon bonds. The yield on a zero-coupon bond is called a spot rate; the yield curve that consists of spot rates is called the spot rate curve. 4
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PRODUCTION POSSIBILITIES CURVE: A curve that illustrates the production possibilities of an economy--the alternative combinations of two goods that an economy can produce with given resources and technology. A production possibilities curve (PPC) represents the boundary or frontier of the economy’s production capabilities‚ hence it is also frequently termed a production possibilities frontier (PPF). As a frontier‚ it is the maximum production possible given existing (fixed) resources and technology
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Teaching Notes Now we step back from supply and demand analysis to gain a deeper understanding of what lies behind the supply and demand curves. It will help students understand where the course is heading if you explain that this chapter builds the foundation for deriving demand curves in Chapter 4‚ and that you will do the same for supply curves later in the course (beginning in Chapter 6). It is important to explain that economists approach behavior somewhat differently than‚ say‚ psychologists
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from http://www.asiaone.com/News/AsiaOne%2BNews/Singapore/Story/A1Story20081031-97438.html Atkeson‚ A.‚ Ohanian L Burda‚ M. and C. Wyplosz‚ (2001).Macroeconomics. Oxford University Press‚ New York‚ pp: 281-284. Bhanthumnavin‚ K. (2002). The Phillips curve in Thailand. Gorman Workshop Series. University of Oxford‚ pp: 3-4 Dornbusch‚ R.‚ S Friedman‚ M.‚ (1968). The Role of Monetary Policy. American Economic Review‚ 58: 1-17. Haydam‚ N.‚ (2002). The Principles of Macroeconomics. Van Schaik‚ Pretoria‚ pp:
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1. Suppose there are 100 consumers with identical individual demand curves. When the price of a movie ticket is $8‚ the quantity demanded for each person is 5. When the price is $4‚ the quantity demanded for each person is 9. Assuming the law of demand holds‚ which of the following choices is the most likely quantity demanded in the market when the price is $6? Explain and show calculations‚ While the question asks of the choices given what the quantity demanded will be‚ there are no choices
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Lectures On Intermediate Microeconomics Kotut c Samwel‚ M. Phil (Economics) Moi University. Chapter one 1.0 Introduction Economics is the science of scarce resource allocation to meet endless human desires. The modern economics science has two major branches i.e. Micro-economics and Macro-economics. Compared to micro-economics Macro-economics is a younger branch of economics. Until the economic depression of 1930s economics was limited to what is
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(Marginal Rate of Substitution) Slope of indifference curve= the amount of a product that must be substitute for another if utility is to remain unchanged. The ratio is the marginal rate of substitution. The MRS is the slope of the indifference curve at a certain point. I spend my money on the product that gave the most marginal utility. Ex: How much X do I have to give to get an extra unit of Y ? Example of indifference curves= If my MRS does not depend on
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or old firms exit the market‚ and (d) the ways in which firms in the industry compete with each othersuch as through prices or advertising. 2. (Demand Under Perfect Competition) What type of demand curve does a perfectly competitive firm face Why The perfectly competitive firm faces a demand curve that is horizontal at the prevailing market price. This is the result of firms in the industry producing a commodity. No individual firm would want to raise its price above its competitors priceswhich
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convexity‚ sensitivity). However‚ these tools assume a parallel movement of the yield curve yet it happens that the yield curve changes in a form of a twist or a butterfly -these concepts will be explained later in the report-. So‚ as managing the risk of a portfolio I traced the evolution of the yield curve using a statistical tool named the Principal Component Analysis to see how frequently does the yield curve shift in parallel and if the duration‚ convexity‚ and sensitivity can be still used as
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