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After obtaining my Ph.D. in physics, and a M.S. in finance from UW-Madison I Joined other physicists and scientists on Wall St. as a quant (quantitative analyst). After leaving NYC I have been teaching MBA & DBA courses for private institutions. My expertise beyond physics, include finance, economics, statistics, etc. I also teach courses in philosophy & critical thinking, etc.
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Consider public policy aimed at smoking.a. Studies indicate that the price elasticity of demand for cigarettes is about 0.4. If a pack of cigarettes currently costs \$5 and the government wants to reduce smoking by 20 percent, by how much should it increase the price?b. If the government permanently increases the price of cigarettes, will the policy have a larger effect on smoking 1 year from now or 5 years from now?c. Studies also find that teenagers have a higher price elasticity of demand than adults. Why mightthis be true?
The government has decided that the free-market price of cheese is too low.a. Suppose the government imposes a binding price floor in the cheese market. Draw a supply-and-demand diagram to show the effect of this policy on the price of cheese and the quantity of cheesesold. Is there a shortage or surplus of cheese?b. Producers of cheese complain that the price floor has reduced their total revenue. Is this possible? Explain.c. In response to cheese producers' complaints, the government agrees to purchase all the surpluscheese at the price floor. Compared to the basic price floor, who benefits from this new policy? Who loses?
Suppose the federal government requires beer drinkers to pay a \$2 tax on each case of beer purchased. (In fact, both the federal and state governments impose beer taxes of some sort.)a. Draw a supply-and-demand diagram of the market for beer without the tax. Show the price paid by consumers, the price received by producers, and the quantity of beer sold. What is the difference between the price paid by consumers and the price received by producers?b. Now draw a supply-and-demand diagram for the beer market with the tax. Show the price paid byconsumers, the price received by producers, and the quantity of beer sold. What is the differencebetween the price paid by consumers and the price received by producers? Has the quantity of beer sold increased or decreased?
If the economy goes into a recession andincomes fall, what happens in the markets forinferior goods?a. Prices and quantities both rise.b. Prices and quantities both fall.c. Prices rise and quantities fall.d. Prices fall and quantities rise.
If a family of three earned $20,000, would they be able to make ends meet given the official povertythreshold?
Binomial setting? A binomial distribution will be approximately correct as a model for one of thesetwo settings and not for the other. Explain why by briefly discussing both settings.
(a) When an opinion poll calls residential telephone numbers at random, only 20$\%$ of the callsreach a person. You watch the random digit dialing machine make 15 calls. $X$ is the number that reach a person.(b) When an opinion poll calls residential telephone numbers at random, only 20$\%$ of the callsreach a live person. You watch the random digit dialing machine make calls. Y is the number of callsuntil the first live person answers.