QUESTION 4 A firm uses two inputs x and y, and their profit function is P(x,y)=3xy-2x+y. Input x costs $2 each and y costs $1 each and they are constrained to spend a total of $100 on inputs.

Question 5: In Question 3, your analysis of the expected final equilibrium in Winter 2022-23, under the assumption of an extremely cold winter, produced a final equilibrium price (P₂) and the equilibrium quantity (Q₂). Now, as your final analytical task for Questions 5 and 6, assume that the governments of the six states comprising New England impose a uniform price ceiling that is below the equilibrium price P₂ you arrived at in Question 3. • Please illustrate the impact of this price ceiling policy on New England's electricity market graphically. Label this new effective price ceiling as Pc; and indicate graphically the impact of the price ceiling, the quantity demanded and quantity supplied at this price, and clearly show any possible surpluses or shortages of electricity.

Question 6: The Wall Street Journal article (referred to in Question 1) mentioned the possibility of rolling blackouts. "Rolling blackouts" is a scheme to purposefully turn off electricity to regions in New England for some predetermined time frame. For example, Region X would experience a scheduled electric outage from 10am till 2pm each day. Other regions would have different blackout time slots. Provide a narrative to explain why the electricity providers would engage in such activity in the context of a potential price ceiling policy discussed in Question 5 (either as a result of such policy or as an alternative to such policy). For this question, you do not need to provide a graphical answer, but you may reference the graph you provided in Question 5.

Question 7: In Question 5 (and potentially in Question 6), your analysis considered a price ceiling at a price lower than the final market equilibrium price (P₂) determined in Question 3. For this question, assume that government policymakers in some U.S. states and several European countries, aware of the higher prices as shown in Question 3, have agreed to subsidize consumers to protect them from the rapid growth in energy costs. Energy markets, such as the market for natural gas and electricity, have been known to be characterized by inelastic demand. However, recent research discussed in the August 25, 2022 issue of The Economist, indicates that while the responsiveness of quantity demanded in response to price changes indeed is "inelastic" (i.e., the absolute value of price elasticity of demand is still less than 1), the percentage change in quantity demanded in response to a change in price is much larger than earlier research indicated. Answer these narrative questions. No graphs are needed. • What does "inelastic demand" formally mean? In addressing this part of the question, please make sure to explain the concept of the price elasticity of demand using a simple formula and by providing a short narrative. • Policymakers are encouraging people to conserve energy in response to the growing energy crisis. Discuss the positives (pros) and negatives (cons) of providing subsidies to consumers in this situation by contrasting subsidies to other potential approaches (such as price ceilings and energy blackouts).

Global warming Suppose there are several countries, I. Each can emit carbon

Public Goods Many people find ospreys to be very beautiful. Ospreys can occasionally be seen in the Ballona wetlands in West Los Angeles. Suppose that there are people indexed by

Question 1 1. (From previous semester's final exam) Consider the market for solar power. Assume the market is perfectly competitive and initially in long-run equilibrium; solar power sells for $.25 per kwh (kilowatt hour, a unit of power). a. Draw 2 graphs, one to represent the market (supply and demand), and one to represent a single firm (demand, marginal cost, and average cost curves). Assume a u-shaped average cost curve. Show the equilibrium price and the quantity produced by the market (Q) and by each individual firm (q). b. Next, to encourage conservation, Congress taxes all forms of energy EXCEPT solar power, causing an increase in the demand for solar power. Show what happens to the market and the firm in the short run; indicate clearly what happens to price, quantity, and profit. c. What happens to the market and the firm in the long run? Indicate clearly what happens to price, quantity, and profit, for each the market and the firm.

(a) what is the ramsey formula for the discount rate r defined n lecture? (b) True or false: There is a moral argument that we should set p=0. The discount rate r measures

More rabbits Suppose that you have the utlity function u(c)= In(c). Suppose that you can choose between taking c = 2 for sure or a rabbit that is worth either c = 1 or c = 8 with probability 2/3 and 1/3, respectively. Which would you prefer?

Geetha' wealth is £100,000 and her utility function is given by U(X)=Ln(x)/4, where Ln(x) denotes the natural log of wealth.Her wealth contingent on whether she becomes ill or remains healthy are given by cill and C healthy respectively.She estimates that there is a 20% probability that she will fall ill,resulting in a £60,000 medical cost.She is thinking of insuring against this risk by buying a units of insurance.Each £1 of health insurance costs 30 pence(£0.3),which she has to pay regardless of whether she becomes ill or remain healthy.When answering the questions,consider C healthy to be on the y-axis and Cill on the x-axis.