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Economics

1.The opportunity cost of an hour of leisure is Select one: O a. your hourly wage. b. 60 minutes. c. an hour of sleep. d. an hour's worth of wear and tear on your TV, exercise equipment, etc.

2.

In the market for a particular product, the price elasticity of supply is +67 , and the price elasticity of demand is −97. At equilibrium, price is 25 (in dollars) and quantity consumed is 35 (in thousands).

(a) Assuming supply and demand are linear, reconstruct and draw the supply and demand curves. Label the intercepts.

(b) To help consumers and produces, the government subsidizes the product by $2 per unit. What are the prices paid by buyers PB and prices received by seller PS after the subsidy? What is the new equilibrium quantity? Illustrate them on the same graph.

(c) How big is the change in consumer surplus, producer surplus, government expenditure, and deadweight loss?

3.Definition 6. An allocation is in the core if no group of people could go off with their endowments and achieve an outcome that for the members of the group is Pareto superior to what the members of the group get in the given allocation. Proposition 2. A CE allocation is in the core. We leave the proof as an exercise. Exercise 15. Prove the last proposition. (Hint: Let there be k

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