Qusetion: These are the exam questions and no references needed so please read it carefully and give it to best expert who will not make any mistake as these are going to be in exam.
Q-1. Suppose that the demand equation: P = 10 - Q and supply equation: P = Q.
a. Calculate the equilibrium price and quantity.
b. Calculate the consumer surplus, producer surplus and total surplus at equilibrium.
c. Suppose the government imposes a tax of $2 for each unit bought. Derive the new equilibrium price that consumers pay, the price that firms receive, and quantity.
d. Calculate the deadweight loss of this tax.
e. In a diagram, show the equilibrium in part a and the equilibrium in part c; and the areas that you computed in part b and d.
Q-2. Consider perfect competition, a non-discriminating monopoly and a perfectlydiscriminating monopoly.
a. Comparing and contrast the equilibrium price and quantity in each of the market structure and identify for each market structure whether it is efficient or results in dead weight loss.
b. Why do governments control certain monopolies? Provide at least one real world example in supporting your argument.
c. Why do governments create certain monopolies?
Q-3. Using a simple example, explain the Comparative Advantage Theory and how Countries can benefit from international trade. What type of economic policy does this theory call for?
Q-4. Two prisoners, A and B, alleged to be conspirators in a crime, are put into separaterooms. A police officer goes into each room and says: If your partner confesses and you confess also, you will only get 3 years in prison. If your partner remains silent and if you are silent also, you will get 1 year in prison. However, if your partner confesses and you remain silent, you will get 5 years in prison. But if your partner remains silent and you confess, you will be out in 0.3 years.
a. If prisoner A confesses, what would be the best strategy for prisoner B?
b. If prisoner A does not confess, what would be the best strategy for prisoner B?
c. Define Nash equilibrium: what is the Nash equilibrium for this question?
Q-5. What is deflation? Discuss the appropriate government policies to deal with a problem of deflation; and also provide diagram (s) and at least one real world example in supporting your argument.