Explain why it may be advantageous to have technological change explained by, rather than outside of, a growth model
What will be an ideal response?
This may be difficult for students to grapple with, but to the extent that the instructor emphasizes this issue in lecture, the student may be expected to understand the importance of technological change and how it occurs as being a crucial issue for development.
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For each pair of items below determine which product would have the higher price elasticity of demand (in absolute value)
a. Insulin for a diabetic or aspirin for someone suffering a headache. b. A new Whirlpool 27 cu.ft. side-by-side refrigerator or electricity to power your all-electric home. c. A can of Red Bull or soft drinks in general.
Suppose aggregate demand is too high to bring about the Natural Real GDP level. A Keynesian policy prescription would call for a(n) _____________________ to close this inflationary gap
A) increase in government spending B) decrease in government spending C) increase in taxes D) decrease in taxes E) b or c
Suppose a risk-neutral competitive firm must produce output before the market price is known. If the uncertain price is given by p = p* + e, where e is a random term with an expected value of zero, a competitive firm should shut down in the short run if:
A. p* < AFC. B. p* < AVC. C. p* < MC. D. p* + e < AFC.
The following table contains different consumers' values for three software titles: PowerPoint, Excel, and Word. Suppose there are 100 consumers of each type. It costs Microsoft $5 to produce each piece of software. If Microsoft wants to devise a pricing strategy that is incentive compatible between consumer types and will maximize its profit, then it should:Consumer TypesPower PointExcelWordAccountants$75$100$150Marketing/Sales$125$80$135Administrative Assistants$50$175$75
A. charge a single price of $300 for the bundle of PowerPoint, Excel, and Word. B. charge $125 for PowerPoint, $175 for Excel, and $150 for Word. C. charge $325 for the bundle of PowerPoint, Excel, and Word and permit consumers to purchase each software title individually at $81.10 each. D. charge $50 for PowerPoint, $80 for Excel, and $75 for Word.