1 Suppose there are two countries, Home (H) and Foreign (F), and two goods, bread (b) and cheese (c), both produced only using labour. Unit labour costs are constant and given by q = 1 and D a= 2 in Home, and a= 2 and___a= 2 in Foreign. Both countries have the same labour force L. Bread and cheese are used to make sandwiches: one sandwich re- quires two units of bread and one unit of cheese. Consumers in both countries have the same preferences and derive strictly positive util- ity from consuming sandwiches, but do not value consuming bread without cheese, or cheese without bread. There is free international trade of goods at prices pb and pc. Normalise the price for bread to = 1. Pb = a) Show that in the free trade world market equilibrium pc = 2. De- termine the production, imports and exports and wages in each country in equilibrium. How many sandwiches will be produced, and how many will be consumed in each country? b) Home considers introducing a trade tariff of 0.1 per unit of im ported good. The revenue from the tariff is to be used fo infrastructure investment by the government. Derive the prices production and trade flows in the new trade equilibrium. How many sandwiches will be consumed in each country? c) Home considers an import quota instead of a tariff, capping import of goods at 0.14 units. Derive the production and trade flows in the new trade equilibrium. How many sandwiches will be consumed in each country? Is the import quota or the tariff a better policy for Home?

Give explanation to all options....

(Q1)  Many software companies, after years of providing unlimited free telephone technical support for their products, began to charge for these services (typically after an initial start-up period of 90 days). Most companies offer two pricing plans. For instance, Lotus Development offers users of their spreadsheet software the option of paying either (i) $2.00 per minute for telephone support or (ii) a $129 flat charge for a year of unlimited toll-free calls. Question 1: Consider a customer with a yearly (expected) demand for service support of P = 11 – 0.1Q, where P is the price per minute and Q is the number of minutes of calls made per year. How many calls would this customer make under plan (i)? Why? How many calls would he or she make under plan (ii)? What would be the annual cost to this customer under each plan? Explain your answer. Question 2: Which plan would this customer choose? Explain your answer.

Economics Allocation of Possible Income You are given different amounts of money on which to live (roughly approximating different Malaysian income groups). You are required to allocate funds to the categories of housing, food, clothing, education, health, transportation, recreation, etc. – other categories may be added by you. Different income groups are asked to critique the allocation of different groups - is it reasonable, why do you say so and how could it be allocated better. T20 income RM15,000 M40 income RM8,000 B40 income RM3000