EC0 581 Final Exam (5 Questions)

EC0 581 Final Exam (5 Questions) - ECO 581 Final Exam...

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ECO 581 Final Exam Please save your answers in a Word file and submit to the Dropbox by midnight Saturday - Good luck! 1. Long-run real interest rates are expected to increase. An accountant and an MBA student (who just finished his course of Managerial Economics) were interviewed regarding the effect of this increase. Keeping all else constant, their answer would likely differ. How do you guess the interviewed will answer? Does the difference in response matters? If yes, why? If not, why not? (20 points) 2. Many cities have experienced a substantial decrease in the amount of garbage being collected after they changed from levying a flat tax on each household to a system where the homeowner is charged a fee for each bag or can picked up. Would this have been the result of a change in demand or a change in the quantity demanded? Would you recommend the flat fee or the fee per bag? Why? (20 points) 3. Define three types of elasticity of demand. Indicate how you would use information from
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