Answer:
Explanation:
A. Solving for P yields P =0011dsiiuuγβββ−−+; thus 21(,)susCov P uσβ−=.Because Cov(P,u) ≠0, the OLS estimator is inconsistent.
B. We need an instrumental variable, something that is correlated with P but uncorrelated with us. In this case Q can serve as the instrument, because demand is completely inelastic (so that Q is not affected by shifts in supply). γ0can be estimated by OLS (equivalently as the sample mean of Qi
Barter means exchange since there was no currency back then so the answer would be D.
Answer:
The elasticity of supply for hot cocoa is 1.43.
(D) Supply in the market for coffee is less elastic than supply in the market for hot cocoa
Explanation:
Using the midpoint formula,
Elasticity of supply for hot cocoa = (change in quantity supplied/average quantity supplied) ÷ (change in price/average price)
change in quantity supplied = 101 - 31 = 70
average quantity supplied = (101+31)/2 = 66
70/66 = 1.06
change in price = 9.75 - 4.5 = 5.25
average price = (9.75+4.5)/2 = 7.125
5.25/7.125 = 0.74
Elasticity of supply for hot cocoa = 1.06 ÷ 0.74 = 1.43. The supply for hot cocoa is elastic because the elasticity of supply is greater than 1.
Elasticity of supply for coffee = (73 - 31)/(73+31)/2 ÷ 0.74 = 42/52 ÷ 0.74 = 0.81 ÷ 0.74 = 1.09. The supply for coffee is elastic because the elasticity of supply is greater than 1.
However, supply in the market for coffee is less elastic than supply in the market for hot cocoa because the elasticity of supply for coffee is less than that of hot coffee.
Answer:
Particulars Amount
Salary $40,000
Interest expenses <u>$8,000</u>
AGI $48,000
Less:
Itemized deduction ($60,000)
<em>Personal exemption (</em><em><u>$3,950)</u></em>
Taxable Income <u>($15,950)</u>
Taxable Income ($15,950)
Personal exemption (<u>$3,950)</u>
Net Operating Loss <u>$12,000</u>
Note: Interest on New York state bonds of $12,000 is an exemption
