community or nation. Higher curves refer to greater satisfaction‚ lower curves to less satisfaction. It is always in the case that the community indifference curves are negatively sloped and convex from the origin because as a nation consumes more of one good‚ it must consume less of another so as to have the same level of satisfaction. The common slope of these two curves‚ which reflects
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the consumer equilibrium in the indifference curve/budget line model. h) In a budget line/indifference curve figure‚ how do you identify the best affordable combination of any two goods? i) What is the meaning of the term "marginal rate of substitution"? j) What is the marginal rate of substitution and how does it relate to an indifference curve? Question Two a) Joe has $100 a week to purchase either computer online service or film for his other hobby‚ photography. The price of on-line service is
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The Laffer curve‚ named after the economist Arthur Laffer‚ is a curve that demonstrates the trade-off between tax-rates and tax-revenues (Wanniski 1978). It is used to illustrate the concept of taxable income elasticity‚ the idea that a government can maximise the revenue by setting the tax rates at an optimum point. This curve can be traced back as far as 1844 to a French economist Jules Dupit who in 1844 found similar effects as Laffer did (Laffer 2004). Dupit also saw tax revenues rising from
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1 M.A.PART - I ECONOMIC PAPER - I MACRO ECONOMICS 1. Basic Macroeconomics Income and spending – The consumption function – Savings and investment – The Keynesian Multiplier – The budget – Balanced budget : theorem and multipliers. Money‚ interest and income – The IS-LM model – adjustment towards equilibrium – Monetary policy‚ the transmission mechanism and the liquidity trap – Basic elements of growth theory : Neoclassical and endogenous. 2. Behavioural foundations of Macroeconomics
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Can government intervention be effective in correcting market failures associated with alcohol? I have chosen to perform a microeconomic analysis surrounding the effect of Alcohol consumption on society. ‘Can government intervention be effective in correcting market failures associated with alcohol’ is the question set. The model I will be exploring is ‘market failure’ ‘where the market mechanism fails to allocate resources efficiently’ (Smith et al‚ 2006‚ p.56) The Times ‘Alcohol-related
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Economics Cornell University and Matthew Rabin Department of Economics University of California‚ Berkeley March 6‚ 2006 Abstract We investigate ‘‘sin taxes’’ on unhealthy items‚ such as fatty foods‚ that people may (by their own reckoning) consume too much of. We employ a standard optimal-taxation framework‚ but replace the standard assumption that all consumers have 100% self control with an assumption that some consumers may have some degree of self-control problems. We show that imposing
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statements: I. X is an inferior good. II. X exhibits Giffen’s Paradox. The following is true: II implies I‚ but I does not necessarily imply II. F T F Suppose that at current consumption levels an individual’s marginal utility of consuming an extra hot dog is 10 whereas the marginal utility of consuming an extra soft drink is 2. Then the MRS (of soft drinks for hot dogs)—that is‚ the number of hot dogs the individual is willing to give up to get one more soft drink is 1/5. If the price of X falls
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goods. The marginal utility of a good is the increase in utility that the consumer gets from consuming an additional unit of the good. Most goods are assumed to exhibit diminishing marginal utility ie. the more of a good a consumer already has‚ the lower the marginal utility derived from the consumption of an additional unit of the commodity. The table below illustrates diminishing marginal utility. Quantity of x Total utility Marginal
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said‚ “as sure as the spring will follow the winter‚ prosperity and economic growth will follow recession.” More to this‚ with reference to the influences in aggregate expenditure in the economy‚ the increasing GDP may result in the rise in marginal propensity to save which will decrease the level of aggregate consumption and hence the money GDP. As a result it is possible to argue that a paradox of thrift may occur as the Chinese will want to save more as they earn more‚ not knowing their actions
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Unit – I Nature & Scope of Managerial Economics Contents Fundamental Economics Concepts: Opportunity Cost‚ Discounting principle‚ Time perspective‚ Incremental reasoning‚ Equi-marginal concept. Marginal concept in economics. Economics of information: Risk‚ Uncertainty‚ Asymmetry of information‚ Adverse Selection‚ Market Signaling. The theory of firm; Econometric Models & Economic optimization. ____________________________________________________________________________________
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