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1. Assume that a store rises the price of butter from $3.7 to $4.3. Consequently, the quantity demanded cuts from 270 to 190 and using the mid-point elasticity approach, compute the price elasticity of demand. Answer:  the price elasticity of the demand equation is (Q2-Q1)/{(Q2+Q1)/2}/( P2-P1)/{(P2+P1)/2} Q1=270 Q2=190 P1=3.7 P2=4.3 = (190-270)/{(190+270)/2}/(4.3- 3.7)/{(4.3+3.7)/2} =(-80/230)/(0.6/4) = -0.348/0/15=2.32>1 It represents the product is highly elastic by nature. 2  A.  How many Nash equilibrium are there in the game below? Explain your answer. Hindalco Advertise Does Not Advertise $50 million $37.5 million Advertise $50 million $75 million Coca-Cola $75 million $67.5 million Does Not Advertise $37.5 million $67.5 million B.  The economic analysis that includes all costs for the entire life span, from concept to disposal of an alternative is called: Present worth analysis Life cycle analysis Capital recovery Cost-effec...

Question .  What is the main difference between Keynesian and neoclassical approaches in the utility of government policy for dealing with short-term fluctuations in the economy? Answer :  Keynesian's school believes that economic cycles are corrected by active fiscal and monetary policy only. So a negative (positive) short-run economic shock is corrected by increasing (decreasing) government spending, which increases (decreases) aggregate demand. The neoclassical school believes that economic cycles cannot be corrected by active fiscal and monetary policy or by any intervention, since the economy self-adjusts. So, if there is a negative (positive) short-run economic shock, aggregate supply will increase (decrease), restoring equilibrium. So government spending will be an ineffective policy tool. Kinsey's economy focuses on side-by-side solutions to demand and periods of recession. Government intervention in economic processes is an important part of Keynesian ...

Question:  Administration of AG Travel and Tour has recognized a group that would be attentive in the vacation package comprising of room, board, and amusement. The maximum quantity that group one is planning to pay money for and board is GHC two thousand five hundred and for diversion is GHC five hundred.  For group two, the maximum quantity they're planning to pay for and board is GHC 1800 and for amusement is GHC 750. Although AG Travel and Tour are not able to identify members of either group, it does know that each group values the components of the package differently. Assuming there is an equal number of members in each group and that the total membership in each group is a single individual. If the marginal cost of in case the service room to each group is GHC 1000. How much can the building charge members every group for the holiday package if it might establish the members in each group?  ii. what quantity can the profit for Ag Travel and Tour be? Si...

Discuss why the market has failed to allocate public goods efficiently. Also, critically discuss whether the market mechanism is more appropriate for allocating common goods? Market failure and public goods Market failure refers to an economic situation where the distribution of goods and services in the free market is ineffective. Individual decisions will not help the group or as an economy at the level at which goods are to be produced and distributed. Public goods are the best example of identifying market failures in an economy.  Public goods have some characteristics  The commons include air and water, which are competitors and cannot be excluded in consumption. The unity of good one consumes cannot be consumed by others. In addition, it requires non-exclusion, which indicates the fact that no person should be excluded from consuming common commodities. The commons market has a foreclosure problem, so the good feature is different. Markets find it ineffe...

Question : AG Travel and Tour management identified two groups of people interested in the holiday package consisting of accommodation, food, and entertainment. The maximum amount Group 1 is willing to pay for room and board is 2,500 GHC and for entertainment is 500 GHC. For Group 2, the maximum amount they are willing to pay for room and board is GHC 1800 and for entertainment is GHC 750. Although AG Travel and Tour cannot identify members of the groups, it knows that each group values ​​the components of the package differently. Assuming that there is an equal number of members in each group and that the total membership in each group is one individual. If the marginal cost of providing the service (accommodation, food, or entertainment) per group is 1000 GHC. Firstly, How much will the hotel charge members of each group for the vacation package if it can identify the members of each group?  Secondly. What will be the benefit of AG Travel and Tour? Third. Sinc...

Question: One of the two methods should be used to produce expansion stabilizers. Method A initially costs $80,000 and will have a salvage value of $15,000 after 3 years. The cost to operate this way would be $30,000 a year. The method will have an initial cost of $420,000, an operating cost of $8,000 per year, and a salvage value of $40,000 after its 3-year useful life. At an interest rate of 12% annually, specify the following: a. PW for method A $> b. PW from method B, $ C. Select method + → A Go to another question that will save this answer. Question 5 One of the two methods that should be used to produce the expansion anchor method would be $30,000 per year. Method B will have an initial cost of 12% per annum, determine the following: a. PW of method A, - 152,000 b. PW of method B, -162677-141377 C. Select which one complied -340472-110742 A None B 312000 C-162677. Method A - Calculate the present value for method A - PW = - Initial cost - Annual operating c...

What are the present value difference between an investment of $12,764 per year for 50 years and an investment of $12,784 per year in perpetuity at an interest rate of 12% per year? Here, Investment amount = $12,764 Interest rate = 12% So for 50 years Present Value = 12764 * (1- (1 / (1 + .12) ^ (50)) / .12 = 105998.6 USD So for an infinite period, Present Value = 12764 / .12 = $106,366.7 So, Difference = $106,366.7 - $105,998.6 = $368.048 1. Illustrate this using a normal form game. 2. Does either company have a  dominant strategy? If yes, what are these strategies? Explain your answer. 3. What strategy will each firm adopt? Explain your answer. 4. Does this game have a Nash equilibrium? Explain your answer 5. Is collusion possible in this game? Explain your answer. Answer 1. The normal form of the game can be illustrated below: Clampett wide well Clampett narrow well TEXplore wide well (1 M, 1 M) (16 M, -1 M) TEXplor narrow well (-1 M, 16 ...