Suppose that the inverse demand for a downstream firm is P = -82 ? 2Q. Its upstream division produces a critical input with costs of CU(Qd) = 3(Qd)2. The downstream firm's cost is Cd(Q) = 2Q. When there is no external market for the downstream firm's critical input, the downstream firm should produce:
A. 14 units.
B. 10 units.
C. 12 units.
D. 8 units.
Answer: D
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The demand function for tickets to Ireland is expressed as
Qd = 1600 - 0.005P + 2 PEngland + 3rain + 2Y, where P is the price for tickets to Ireland, PEngland is the price of tickets to England, rain is the inches of rain Ireland receives annually, and Y is annual household income. Assuming PEngland is $1000, rain is 30 inches per year, and income is 40,000, how much would the price of tickets to Ireland have to fall for consumers to be willing to buy one more trip per year? A) $15 B) $20 C) $50 D) $200
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Suppose the government taxes 10 percent of the first $30,000 in income and 20 percent of all income over $30,000 . Calculate the marginal tax rate and the average tax rate for a person who earns $70,000
Suppose individuals expect that interest rates will decrease in the future. Also assume that the Fed wants to prevent any change in current output. Given this goal of the Fed, the Fed should implement a policy in the current period that
A) shifts the IS curve rightward. B) shifts the IS curve leftward. C) shifts the IS curve leftward and the LM curve upward. D) shifts the LM curve upward. E) shifts the LM curve downward.