ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Explain using a production possibilities curve what happened to the Russian economy when the SOEs were sold off.
Transcribed Image Text:together and turn it in.
Since 1989 Eastern European countries have moved from operating planned economies towards operating market
economies, This rate of change has varied. Russia and Kazakhstan, for instance, sold off its state owned enterprises
(SOES) and generally reduced government intervention at a quick rate. In contrast, Croatia, Poland and Slovenia
removed price controls and subsidies and privatized relatively slowly.
Some economists claim that the "shock therapy" swept away safety nets with state ownership. In a number of
Russian towns, the SOES provided not only jobs but also healthcare, childcare and pensions, When the SOES were sold
off unemployment rose and life expectancy fell. The lives of men were particularly badly affected with their lifespan
falling even further than that of women.
The question of how fast to make the transition from a planned to a market economy is now facing China. The
country is becoming more market orientated with the role of the private sector increasing. Structural change is also
occurring with the proportion of output and employment accounted for by the secondary and tertiary sectors increasing.
The first decade of the twenty-first century witnessed a period of rapid economic growth in China boosted by high
levels of investment and a low exchange rate which increased net exports. Although the country's economic growth
slowed in the second decade of the twenty-first century it was still higher than most countries.
The table below shows some key social and economic data on China, Poland, Romania, and Slovenia.
Key Social and Economic Data
Unemployment
(% in 2014)
Life Expectancy
Annual Growth
Country
2014
(% change in real GDP) 2014
Male
Female
7.3
4.1
China
73.4
77.7
Poland
73.5
81.5
3.4
12.3
Russia
64.7
76.6
0.6
5.2
Slovenia
74.4
81.9
3.0
13.1
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- Economics: Industrial Economics Question: 1 A firm produces output according to the following production function: q = 10 K^1/4 L^1/4 The price of capital is r = 9 and the price of labor is w = 25 and there is a set-up cost F = 90 that the firm only pays if it decides to produce in the market. If the firm wants to produce 'q' units of output, solve the cost minimization problem. Obtain total cost C* (as a function of output level q). Now assume that the firm operates under monopoly and the inverse demand function is p = 115 - 2 q Use the solution to the cost minimization problem to solve the profit maximization problem of this firm. Determine this firm's price p*. Please Show your Work. a. 55 b. 75 c. 85 d. 65 Question: 2 A firm produces output according to the following production function: q = 10 K^1/4 L^1/4 The price of capital is r = 9 and the price of labor is w = 25 and there is a set-up cost F = 90 that the firm only pays if it decides to produce in the market. If the firm…arrow_forwardThe table below shows Lanark's production possibilities. Wheat Cars A 0 95 B 90 90 C 158 81 204 63 226 F 235 36 a. If Lanark is producing 72 cars, it can produce approximately b. If Lanark is currently producing combination C, the cost of 46 more wheat is (Click to select) c. If Lanark is currently producing combination D, the approximate per unit cost of an additional car is necessary, round your answers to 1 decimal place. Remember to round 0.05 up to 0.10. wheat. (Click to select). Ifarrow_forwardSuppose you start with a point on the Production Possibilities Curve. Now, unemployment increases dramatically. How would you show that change given your initial position?arrow_forward
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