Category: Economics

➤ Why do countries gain from specializing and trading?
Specializing in goods with lower opportunity costs increases total world output. Trade lets countries consume beyond their own production possibility frontiers. This raises efficiency, lowers relative prices, and expands available variety. The exact gains depend on how the terms of trade divide the benefits between partners.

Suppose the estimated supply function for avocados is given by QS = 48 + 15p – 10pf , where pf is the price of fertilizer. The estimated demand for avocados is given by Qd = 233 – 40p + 5pt , where pt is the price of avacados per pound.a. (3) Solve for the initial equilibrium price and quantity of avocados when the price of fertilizer, pf , is equal to $0.90 per lb. and the price of avacados, pt, is equal to $0.80 per lb.b.Solve for the initial equilibrium price and quantity of avocados if the price of fertilizer, pf , increases to $2.00 per lb. and the price of avacados, pt, remains $0.80 per lbc. Use these equilibrium values from parts a. and b. to solve for the price elasticity of demand for avocadosd. Given your calculations, are avocados elastic, inelastic or unit-elastic? How have total expenditures on avocados changed as a result of the change in the price of fertilizer?

Which of the following is NOT one of the goals of monetary policy?
To change levels of government spending and taxation
To promote the maximum sustainable level of employment
To promote stable prices
To avoid extremes of inflation and deflation
Here are all the tutorials from Unit 3. Use them as needed throughout the Unit 3 Milestone.
Unit 3 Tutorials
3.1 History of Money and the Central Bank
3.1.1 History of Money
3.1.2 Gold Standard
3.1.3 Fractional Gold Standard/Fiat Currency
3.1.4 History of the Central Bank
3.1.5 Central Banks
3.1.6 U.S. Central Bank: Federal Reserve
3.2 Monetary Policy
3.2.1 Money Supply and Interest Rates
3.2.2 Interest Rates
3.2.3 M0, M1, M2
3.2.4 Reserve Requirement and the Money Multiplier
3.2.5 Open Market Operations
3.2.6 Federal Funds Market
3.2.7 Discount Rate
3.2.8 Goals of Monetary Policy
3.2.9 Overview of Expansionary and Contractionary Monetary Policies

Design a digital system to simulate the scoring of a single game in tennis between two players: Player A and Player B.
In tennis, a player must win at least 4 points and be ahead by at least 2 points to win the game.
The point progression is as follows:
Points: 0 → 15 → 30 → 40 → Win
If both players reach 40, the game enters deuce. From deuce, if one player scores, they gain advantage. If the other player scores next, the game returns to deuce. Whichever player is currently in an advantage, and the same player scores, they win the game.
The system must take two inputs:
A: Active-high pulse when Player A scores a point
B: Active-high pulse when Player B scores a point
Only one of A or B will be high at a time
The system has a 2-bit output:
00 → Game is ongoing (no winner yet)
01 → Player A wins the game
10 → Plaver B wins the game

Use the following setting for questions 1-3. Consider the following static game:Suppose this game is played for two periods. At the beginning of period 2, the players can observe the outcome from period 1. There is no discounting.
1. First, assume only pure-strategy SPNE such that either player’s second period strategy DOES NOT depend on the first period outcome. How many such SPNE are in this game?
(a) 0
(b) 1
(c) 2
(d) 3
(e) 42
2. Consider ONLY SPNE from the previous question. What is the maximum sum of the players’ payoffs that can be achieved in the two periods combined?
(a) 3
(b) 4
(c) 7
(d) 9
(e) 123
3. Now consider ALL possible pure-strategy SPNE such that (T,L) is played in the first period. What must be the equilibrium outcome in the second period of such SPNE?
(a) (T, L)
(b) (M, L)
(c) (B, R)
(d) (T, R)
(e) There are no such SPNE

Suppose that Tim, an economist from a college in Pennsylvania, and Alyssa, another economist from a graduate program in the Northeast, are both guests on a popular science podcast. The host of the podcast is facilitating their debate over government bailouts. The following dialogue represents a portion of the transcript of their discussion:Alyssa: Thanks to recent financial crises, the concept of bailouts is a hot topic for debate among everyone these days.Tim: Indeed, it’s gotten crazy! A government bailout of severely distressed financial firms is unnecessary because free markets will properly price assets.Alyssa: I don’t know about that. Without a bailout of severely distressed financial firms, the economy will experience a deep recession.The disagreement between these economists is most likely due to .a. differences in valuesb. differences between perception versus realityc. differences in scientific judgments