What are the different steps involved in optimization in differences?
What will be an ideal response?
Optimization in differences has three steps:
a) Translate all costs and benefits into common units, like dollars.
b) Calculate the marginal consequences of moving between alternatives.
c) Apply the Principal of Optimization at the Margin by choosing the alternative with the property that moving to it makes you better off and moving away from it makes you worse off.
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If firms in an oligopolistic industry consistently cut their price to sell more output, what price and output will result?
A) the monopoly price and output B) the competitive price and output C) the monopolistically competitive price and output D) a price lower than the competitive price and less output than the competitive amount E) a price lower than the competitive price and more output than the competitive amount
The above figure shows the market for college education in the United States. With no government intervention, the unregulated market equilibrium is ________ because education generates ________
A) efficient; positive external benefits B) inefficient; positive external benefits C) inefficient; positive external costs D) efficient; positive external costs E) inefficient; public goods
You turn to the bond market page of a newspaper and look under the column headed "Net Chg" and see that it says, "-1/4" this indicates that
A) the closing price for the bond on this particular day was $2.50 lower than on the previous day. B) the closing price for the bond on this particular day is $0.25 lower than on the previous day. C) the yield for the bond has fallen by 0.25% compared to the previous day. D) the yield for the bond has fallen by 0.25% compared to exactly one year ago.
Stagflation refers to a situation in which the economy is experiencing:
A. high economic growth and high inflation. B. low economic growth and high inflation. C. high economic growth and low inflation. D. low economic growth and low inflation.