The apparent conflict between the time-series and cross-section evidence on the U.S
saving ratio, where cross-section studies predict a long-run ________ in the ratio that does not emerge from the time-series studies, is ________ by the permanent-income and life-cycle hypotheses. A) rise, resolved
B) rise, created
C) fall, resolved
D) fall, created
A
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Dorothy lives in a city with high air pollution. Pollution is a bad, but she is able to avoid air pollution by wearing a face mask. Her preferences are given by
U(q1,q2 ) = (q1 - P)2q22 where q1 is the amount of time she spends wearing a mask, P is the amount of pollution and q2 is a composite of other goods (p2 = 1 ). Dorothy must decide how much to wear a mask and how much q2 to purchase. The price of masks is pM. Assume q1* > P when answering this question. a. Derive Dorothy's demand for masks, q1*(p1,Y, P) b. How does the quantity of pollution affect the demand for masks? That is, find q1*/P. c. How does her income influence the quantity of masks she purchases? That is, find q1*/Y. d. What condition must hold for the assumption q1* > P to hold?
Why are sellers willing to sell more at a higher price?
Total costs in the table are:Control variableTotal BenefitsTotal CostsNet BenefitsMarginal BenefitMarginal CostMarginal Net BenefitQB(Q)C(Q)N(Q)MB(Q)MC(Q)MNB(Q)0000---190010080090010080021,700300C80020060032,4006001,800700E4004A1,0002,00060040020053,5001,5002,000500500F63,9002,1001,800D600-20074,2002,8001,400300700-40084,400B800200800-60094,5004,5000100900-800104,5005,500-1,00001,000-1,000
A. decreasing at a constant rate. B. increasing at an increasing rate. C. increasing at a constant rate. D. decreasing at a decreasing rate.
In the fall of 2007, most economists felt that the
A. unemployment was at the natural rate. B. unemployment rate was below the natural rate. C. inflation rate was above the natural rate. D. inflation rate was below the natural rate.