### Expert Solution: Economic questions

Question 1

1.A. Discuss the role of traditional factor inputs in the production function of a firm.

1.B. Discuss the role of technology in the production function of a firm.

Typically, factors of production include natural resources, capital, labor, and land. Firms use these inputs directly to produce goods or services. On the other hand, technology is used to put these factors of production to work. Firms do not acquire additional units of technology to integrate into the production process in the same way they might purchase more land in order to increase output. Instead, the technology available in the economy or industry enables them to utilize capital and labour more or less efficiently… Read more

Question 2

1.A. Discuss the impact of competition in the health care sector

Question 3

1.A. Discuss the impact of oligopoly in the health care sector

Question 4

1. Regression models are important to understand business phenomena. Discuss.

Question 5

You are an advisor for the baking system and have collected the following information.

Y = total costs per employee (in thousands of dollars per year). X1 = proportion of total loans which go to businesses (measured as a percentage so that a value of, say, 20 means 20% of loans are made to businesses). X2 = proportion of total deposits which come from households (measured as a percentage so that a value of, say, 20 means 20% of deposits come from households). D = a dummy variable which equals 1 if the bank is a big bank (has more than 100 employees), = 0 otherwise. I also constructed another variable, Z = X2×D.

As an advisor you ran a regression of Y on X1, X2, D and Z. Results from this regression are given below in the following fitted regression line:

Y =   160 – 209×X1 + 320×X2 – 2.49×D -23×Z (6×10-7)

(0.020)     (0.02)       (0.05)          (0.07)

where the numbers in parentheses are P-values

5.A. How would you interpret (in words) the estimated coefficients in this model? What is the OLS estimate of the marginal effect of X2 on Y?

5.B. Which of the statements you have just made are statistically significant at the 5% level? Which are significant at the 1% level?

Question 1

1.A. Discuss the main drivers influencing the demand of cars.

• Consumers’ tastes and preferences: Car models which consumers’ tastes and preferences are greater tend to have a large demand and their demand curves, therefore, lie at a higher level. In contrast, when particular cars go out of fashion or consumers’ tastes and preferences no longer remain favorable to them, their demand decreases… Read more
• People’s income: Demand for cars is higher in countries/regions where the majority earn above average. Greater income levels mean greater purchasing power and therefore when the income of the people increases, they afford to buy cars… Read more
• Changes in prices of related goods: Cars’ related goods include complements like petrol/diesel and substitutes such as trains. Currently, the prices of complementary goods (particularly petrol and diesel) have been decreasing thus encouraging more people to buy cars. Besides, the cost of using alternative means of transport such as electric trains has become unbearable for some people, compelling them to buy cars… Read more

1.B. Define the main drivers influencing the supply of cars.

• Costs of inputs (such as labor, steel, and rubber): Read more
• Government interventions, for example, taxes: Read more

Question 2

1.A. Discuss the oligopoly of taxi drivers in Greater London

Question 3

1.A. What do we mean by a perfect competitive market

Question 4

1. Discuss the concept of efficiency within the framework of a classical linear regression model. The student should support this discussion also offering examples in business economics

Question 5

Should we consider health care a necessity of a luxury good? Discuss.

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Expert Solution: Economic questions