1- What determines the profitability of an investment?
HAHAHA. So easy I don’t even have to answer lol.
2- How does the notion of consumer surplus allow to measure the benefits derived by consumer from trading on a particular market? Illustrate graphically and explain.
The man has a surplus of money and so he is happy to go to the surpermarket to buy the CD of Jul.
3- Consider a differentiated good that can be produced by several firms, for example cars. The production of each variety of the good requires a fixed Research & Development cost and exhibits increasing returns to scale. Assume that firm’s production and pricing behavior can be described by the monopolistic competition model discussed in the course. How would a change in market size affect the number of firms in the market? The market price? The consumer welfare?
If the market’s size reduces, there are fewer firms in the market because there is not enough space for every firm. For instance, if you say enterprises are hamburgers and the market is your stomach, if your stomach is getting smaller you can’t eat as much hamburgers as you did before. The market price is the same (the hamburgers are still costing 6 euros each for example). The consumer welfare is not the same because people are sad not to eat as much hamburgers as before.
4-Economic convergence is the hypothesis that poorer countries per capita incomes will tend to grow at faster rates than richer countries. Does the Solow growth model predict economic convergence? Are these predictions supported by empirical facts?
Aha that was a trap question lol. Solow is not an economist lol, he’s the guy who’s played by Harrison Ford in Star Wars. Omfg I can’t even.
5- Assume the consumption of particular good creates positive externalities on other consumers. Give an example. Would a decentralized competitive market lead to efficient consumption and production level? Explain and illustrate.
Today I was taking the RER and someone was smoking illegal substances and the atmosphere was far more relaxed than usual (that’s a positive externality). About consumption… I don’t think there is an efficient or an inefficient consumption. I would rather say, first, that it deals with people who, at a time, gave me their hand. Why are we so inclined to judgement? Because we grew up being compared to each other. And it makes me so sad I really have to go to the next question to stop thinking about it.
6- Suppose that the government decides to issue tradable permits for a certain form of pollution.
(a) If the government choses to distribute the permits, does the allocation of permits among firms matter for efficiency?
(b) Could the same outcome be reached by implementing a pollution tax?
Moyenne de classe: 12
Note la plus basse: 1
Note la plus haute : 8