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Final Exam Review

# Final Exam Review - perfectly competitive firm a Assu ming...

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Econ190 Professor Belasen Practice Problems for the Final Chapters to review: 10, 14, 17, 18, 19, 20, 21, 22,23, 27 1. Monopolies: a. Suppose you have a monopoly thinking about becoming a price discriminator. If there are 5 consumers with reservation prices of (10, 8, 6, 4, 2), and the monopolist has a marginal cost per unit of \$4, what is the optimal quantity currently? And what will it be as a price discriminator? b. Calculate Profit in each case. 2. GDP: Suppose that in 2000 a country produced: 10,000 apples valued at \$1.00 each 30,000 oranges valued at \$0.50 each a. Calculate the Market Value GDP for that country.

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b. If the prices in 2005 increased to \$1.20 and \$1.00 respectively, calculate the nominal GDP and real GDP for the following quantities: 12,000 apples 24,000 oranges 3. Labor The following problem refers to a
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Unformatted text preview: perfectly competitive firm. a. Assu ming that the price of the firm’s output sells for \$2, fill in the missing data in the table above. b. If the market rate is \$40, how many workers will the firm hire? 4. Risk Which of the following gambles would a risk averter take? 0.1% chance to win \$1,000,000 99.9% chance to lose \$1 0.01% chance to win \$1,000,000 99.99% chance to lose \$1 10% chance to win \$100 20% chance to win \$10 40% chance to break even 30% chance to lose \$20 5. Money and the Interest Rate Labor Input Output Marginal Product Value of Marginal Product 1 50 2 90 3 120 4 140 5 150 6 150 Suppose that: C = 600 + 0.75(Y-T) - 400r I = 300 - 500r G = 100 = T - 100 NX = -50 a. Find GDP (Y) in terms of r. b. If the Fed drops interest rates by 3%, what happens to GDP?...
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