Economics

To further protect your online security, active links from Q&A has been disabled!

Does the fact that people go to watch the same movie again and again contradict the Law of Diminishing Marginal Utility? Explain by giving reasons.

Best Answer

No not in the slightest bit. The first time you see the movie you absolutely love it. well score that 10. the second time you see it, it still kicks ass- 9 the third time, fuck, its still great -6 the forth time still pretty good but its getting a little old 3. the fifth time only 1- its still e njoybale. but the sixth time you are like god dammit why did i waste my time on this shit. so negative 2 (-2) so you total utility would be 10+9+6+3+1 =29 -2 = 27. utlilty maximizing would be accomplished when your marginal utility reached 0. so five times would have been a good idea, but the sixth no. no matter what anyone says if they loved a movie, the first time they saw it was def better than the 40th time they saw it.

1. What is the opportunity cost to a bank of holding excess reserves ? 2. If banks hold excess reserves, how will this affect the money multiplier? 3. Explain the mechanism through which an increase in the discount rate would affect the money supply.

Best Answer

1. less funds are loaned out, hence the interest rates earned are forgone. 2. the required reserve rate is inverse with the money multiplier, look at the formula and it is obvious. 3. increased discount rate leads to more buying of bonds, thus reducing the money supply. here's a website to help your understanding. http://www.uri.edu/artsci/newecn/Classes/Art/ INT1/Mac/1970s/Money.supply4.html

Alright here I go...this is really general- I taking Economics next year and my teacher told me that we will not have a final exam, instead writing a paper on...globalization? I don't quite remember - economic globalization or something? I honestly have been studying my book but have absolutely no clue what this is? Do you think you can help me? I know it's not specific at all but any information about it, examples or even opinions would be helpful... Thanks?

Best Answer

ok so assuming what you want to know is globalization in terms of economic development. well, its all about profit and wealth creation really (both for the public & private sector). the term is actually misleading in the sense that its been treated as a new word but the truth is that the world was globalized economically even before the word was coined. one major difference between globalization now and then is probably the speed & volumne in the movements of capital (especially capital for speculative purposes and not for production). nations began to move beyond their national borders to extract resources & stuff to accomplish various economic & political goals many many years ago (can't remember how many but just look it up urself). economically to keep price & profit in sync & politically to keep ppl who likes to see things grow & expand happy. HTH

What determines whether you would buy cheapest or buy what you want the most? Give reasons with examples for your viewpoint.

Best Answer

Preferences of individuals, let's take an example I like to eat potatoes, I prefer potatoes on rice to accompany my meat and vegetable. 1) Between potatoes, I do not have a preference between the different types so I just choose the cheapest. 2) Between potatoes, I prefer the bintje type (Belgian sort) and I am ready to pay 50% more because FOR ME their taste is over 50% better than others and FOR ME all potatoes standard prices are already cheap.

Suppose an industry experiences decreasing average costs of production over the relevant range of market demand. Discuss the merits of a regulation requiring the natural monopolist to price where demand equals marginal cost and to service all willing customers. What about where demand equals average cost? Are any practical difficulties likely to be encountered with either regulatory program?

Best Answer

First, I think you want the MC to equal price, not demand. From there, it provides the most people with the good or service in question while simultaneously providing a profit maximizing situation for the monopolist. Given the question you must be familiar with demand schedules and all that they entail. Imagine the MC=P scenario, i.e. the market clearing situation. Most people automatically expect monopolies to charge outrageous prices, but visualize what happens when price goes up...less people purchase and Q decreases. This leads to less profit, despite potential revenue increases. If regulation requires the monopoly to service all interested customers, the monopoly can't stay profitable. Again, imagine the demand schedule for this scenario. The maximum quantity demanded (i.e. all interested customers) requires a price of zero. It would be incredibly difficult to justify the perfect monopoly situation of charging everyone their perfect willingness to pay, aside from the impossibility of that determination. With out government subsidies, the monopoly could not remain in business if the cost of production was above zero.