Section A 3. Assume that cereal and milk are complementary goods. The government begins to subsidize the production of oats, which is an input in the production of cereal.
For each of the following markets, draw a correctly labeled supply and demand graph and show the effect of the oat subsidy on the equilibrium price and quantity in the
short run
• The oats market
The cereal market
The milk market
of the demand for cereal is price elastic, how will total revenues for the cereal producers
change because of the government subsidy?
Overall revenue will increase because of the elastic markets sensitivity to price changes. The price decreasing would encourage more and more people to buy the product.
What is the formula for the cross-price elasticity of demand for cereal and milk? Will
the value of XED be (+) or (-)? Explain.

Insurance companies have internal controls in place to protect assets, monitor the accuracy of accounting records and encourage operational efficiencies and adherence to policies. these internal controls are generally of two types: administrative controls and accounting controls. administrative controls are the policies and procedures that guide the daily actions of employees. accounting controls are the policies and procedures that delineate authorizations of financial transactions that are done, safeguard assets, and provide reports on the company’s financial status in a reliable and timely manner. internal controls should include both preventative and detective controls. the purpose of preventative controls is to stop problems and errors before they occur. detective controls identify problems after they have occurred. preventative controls are usually more effective at reducing problems, but they also tend to be more expensive. internal controls must be flexible to adjust for changes in laws and regulations in addition to adding new products or modifying current ones. companies must also do regular analyses to ensure that the benefits of implementing the controls are worth their costs. when concerned about paying unwarranted insurance claims which type of control would be useful?

Amarket that consists of all possible consumers regardless of their specific needs or wants is a

Suppose that two firms produce differentiated products and compete in prices. as in class, the two firms are located at two ends of a line one mile apart. consumers are evenly distributed along the line. the firms have identical marginal cost, $60. firm b produces a product with value $110 to consumers.firm a (located at 0 on the unit line) produces a higher quality product with value $120 to consumers. the cost of travel are directly related to the distance a consumer travels to purchase a good. if a consumerhas to travel a mile to purchase a good, the incur a cost of $20. if they have to travel x fraction of a mile, they incur a cost of $20x. (a) write down the expressions for how much a consumer at location d would value the products sold by firms a and b, if they set prices p_{a} and p_{b} ? (b) based on your expressions in (a), how much will be demanded from each firm if prices p_{a} and p_{b} are set? (c) what are the nash equilibrium prices?