Assume that the market clearing assumption should and that Labor receives a wage equal to the MPL (dY/d, The first principle of economics is that people face trade-offs. Consider a simple economy that produces only cell phones. What is the cost of one more beer? Show more. Suppose the base year is 2001. Last year, she purchased $7,000 worth of scrap metal. b) the size of its factories. Wages=3, Rental rates=6, Price of product = $10 a) In the short run, capital is fixed at 5. - the fallacy of composition. However, when examining the operation of large health and medical facilities, the opposite is often t, Suppose you are hired to manage a small manufacturing facility that produces Widgets. prices have decreased 2 percent between the base year and 2012. Find short-run equilibrium output. Inflation reduces the purchasing power of the currency and also reduces the return on investment. Round to 2 decimal places. a. uses the least costly amount of resources available b. has a small number of people who do not work c. resources are used to make the most goods and services possible d. none of the above, Assume that an economy's production function is Y = 1000L^1/2, so that when the marginal product of capital is equated to the real wage the labor demand curve is L = 250, 000 (P/W)^2. We will let suicide victims be our population. Examine the four components of GDP and different approaches to GDP calculation. Explain the following terminologies in economics Spreading the ove, Refer to the figure. 2. The company's production f. Suppose the production function for a firm is given by q = 5L0.5K0.25. Fill in the missing values in the Use the IS-LM-model to explain what happens to national income. Agree. 0.650. The following table contains information on the economy's money supply, velocity of money, price level, and output. Indicate whether the following statement is correct or incorrect. GDP only counts final goods and services and not intermediate goods. Velocity \ of \ money \ (2011) \ = \ 15 1. What is the short-run production function? 4. The money supply grew at a rate of from 2014 to 2015. Quantity of Money Price Level (Dollars) Quantity of Output (Cell phones) Nominal (Dolla: Year Velocity of Money increased 2017 7.20 500 2018 decreased 15 500 remained the same The mo rate of from 2017 to 2018. The marginal product of oranges in plant 1 is MP1 = 1,000 - 01 and in-plant 2 is MP2 = 1,200 - 202. When the pric, Suppose an economy is characterized by the Solow model. Which items involve a microeconomic issue and which involve a macroeconomic issue? The following table contains information on the economy's money supply, velocity of money, price level, and output. Personal income will The following table contains information on the economy's money supply, velocity of money, price level, and output. All numbers are in millions of dollars. Fill in the missing values in the follow selecting the answers closest to the values you calculate. In the U.S., gross domestic product (GDP ) and gross national product (GNP) are close in value. Consider a simple economy that produces only cell phones. C. the relationship between the, Consider an economy described by the following equations: Y=C+I+G+NX; Y=5000; G=1000; T=1000; C=250+0.75*(Y-T); I= 1000-50r; NX= 500-500*e; r=r*=5. Suppose the production function is q=L^{0.75}K^{0.25}. Which of the following st, Quantecon is a country in which the theory of money operates. Fill in the missing values in the following . For example, in 2017, the money supply was $360, the price of a cell phone was $4.50, and the economy produced 800 cell phones. Many U.S. citizens currently work in foreign countries while few foreign citizens currently work in the U.S. For example, in 2012, the money supply was $360, the price of a cell phone was $4.50, and the economy produced 800 cell phones. The minimum cost, Consider a firm with short-run production function Q=K+L. The price of a unit of beef = $19 and the price of a unit of soy = $14. The consumer can borrow or save at the interest rate 10%. Disposable personal income Consumption 0 100 100 120 200 140 300 160 a. Which of the following is NOT a shortcoming of GDP as a measure of well-being? Suppose that John, April, and Tristan have two production plants for producing orange juice. Not copy pasted answer from google. You will pay $10,000 for labor costs and $12,000 for capital costs. Disagree. Define the term information technology. A) financial services B) electricity C) mobile phones D) mass transportation, 3. How much L to use to maximize the marginal product of labor? Assume Government expenditure has increased by 10. All other trademarks and copyrights are the property of their respective owners. The economy has two sectors-cloth and food. \end{array} Paul s Pizza Parlor bakes pizza pies according to the following production function: Q = 3L + 0.3L^2 - 5L^3. The velocity of money remained the same at 15. The following table contains information on the economy's money supply, velocity of money, price level, and output. The following table contains information on the economy's money supply, velocity of money, price level, and output. You'll get a detailed solution from a subject matter expert that helps you learn core concepts. The level of prices and the value of money, Money supply, money demand, and adjustment to monetary equilibrium, The classical dichotomy and the neutrality of money, Using money creation to pay for government spending, The Fisher effect and the cost of unexpected inflation. Use a production possibilities frontier to illustrate society's trade-off between two "goods" a clean environment and the quantity of industrial output. Draw a graph of aggregate demand and aggregate supply to illustrate the current situation. c. Assuming that this economy produces only the thr. Assume the market pr, Consider the case of Thailand, a small open economy that faces constant goods prices. Production and Prices in Year 1 (Base year) Which range of aggregate supply would represent an economy in the short term when prices are sticky and the economy is producing low levels of output? Consider a simple economy that produces only pies. Image transcription text This firm operates in the short run where capital (K) is fixed at a quantity of 16. C. If a company follows a policy of matching maturities, this means that it matches its use of common stock with its use of long-term debt as opposed to short-term debt. Eskew, Inc., which closes its books on December 31, is authorized to issue $500,000 of 9%, 15-year bonds dated May 1, 2018, with interest payments on November 1 and May 1. D. using the least costly prod. Assume that K is fixed at 10 in the short run. (Assume that the change in fair value results from a change in market interest rates rather than a change in instrument-specific credit risk.). Learn about the inflation rate. B) For what values of labor does increasing marginal product exist? b. spending and income. Assume that the aggregate production function has the form Y = K^(1/3) L^(2/3). The money wage rate falls, real GDP increases, and the price level rises. B) $4 per unit, and average fixed cost (AFC) is, A firm has the production function q = 0.2LK + 5L^2K - 0.1L^3K. Rajiv manages a grocery store in a country experiencing a high rate of inflation. B. how firms respond to changes in interest rates. For example, in 2011, the money supply was $320, the price of a cell phone was $8.00, and the economy produced 600 cell phones. Consider the following model of a simple economy: The economy is in a recession with high unemployment and low output. Understand how to use the inflation rate formula through examples. a. Labor can be used to produce only two commodities - X a necessity good (food), and Y, a luxury good (music and merriment) Su, Consider Live Happley Fields, a small player in the strawberry business whose production has no individual effect on wages and prices. For example, in 2017, the money supply was $240, the price of a cell phone was $7.20, and the economy produced soo cell phones Fill in the missing values in the following table, selecting the answers closest to the values you calculate. GDP is an imperfect measure of economic well-being because it fails to measure what types of production? Year Quantity of money Velocity of money Price level Quantity of output Nominal GDP (Dollars) (Dollars) (Cell phones (Dollars) 2017 240 15 7.20 500 3,600 , Consider a simple economy that produces only cell phones. Product Quantity Price Per Unit Get access to this video and our entire Q&A library, What Is Inflation Rate? Fill in the missing values. Assume it is currently in its initial steady state. Product Quantity Price Quantity Price Right now, the firm has 10 units of K, w = 3, and r = 10. The purchase of tires from Bridgestone tire company by an automobile manufacturer. The Gross Domestic Product evaluates general production in the economy. Suppose that the economy consists of two types of firms: type A firms which produce output using a technology Qa Min 1 3K,L and type B firms which produce output using a technology Qb Min12K,L. B. an economy will automatically seek the level of output a, Suppose a production function is q = K^(1/2)L^(1/3) and in the short run capital (K) is fixed at 100. nominal GDP is larger than real GDP in years after the base year. Textbooks 15 90 20 100, Real GDP in 2009 equals $6680. c. Suppose that government expenditures fall by 500, The table below contains data for a hypothetical closed economy that uses the dollar as its currency. For example, in 2011, the money supply was $240, the price of a cell phone was $7.20, and the economy produced 500 cell phones. The efficiency of ma3. See answer Advertisement topeadeniran2 Show how the event and its related adjusting entry affect the accounting equation. Using the line drConsider a decrease in the supply of money th, An economy with zero net exports is described below: C= 80 + 0.75 (Y - T) I^p= 100 G= 150 NX= 0 T= 180 The multiplier in this economy is 4. a. Inflation-induced tax distortions Consider a simple economy that produces only pens. We reviewed their content and use your feedback to keep the quality high. Real GDP falls if output falls. The inflation rate from 2017 to 2018 was. {/eq}. c. There are only a handful of firms competing against each other in, Suppose you have a firm whose production function is given by Q=K^0.3L^0.7. Velocity and the quantity equation Consider a simple economy that produces only pies. A. For example, in 2012, the money supply was $360, the price of a cell phone. a) What is the price level and money supply? The following table contains information on the economy's money supply, velocity of money, price level, and output. \hline \text { white, male } & 210 & 3,360 & 13,610 & & 22,050 \\ Use a production possibilities frontier to illustrate society's trade-off between two "goods" a clean environment and the quantity of industrial output. Production and Prices in Year 2 This tends to ______ saving, thereby ______ the quantity of investment in the economy and ______ the economy's long-run growth rate. The short-run economic outcome resulting from the increase in production costs is known as. Experts are tested by Chegg as specialists in their subject area. In the short run, when a firm is producing quantities that are greater than the quantity which minimizes short-run average costs, the marginal product of labor (MPL) A. will be rising the more the firm is producing. There are three productive factors. In the best case scenario, the Fed will: a Increase money supply to take the economy to point X. b Decrease money sup, Consider the following competitive economy: Capital Stock: K=150 Labor Supply: L=150 Production Function: Y = K .4 L .6 Consumption Function: C = 10 + 0.7 Y d Investment Function: I = 40 - 100r Government spending: G=30 Taxes: T=30 For this produ, The table below pertains to Wrexington, an economy in which the typical consumer's basket consists of 20 pounds of meat and 10 toys. \text{Adjustment} \hspace{54pt} \text{Assets} \hspace{105pt} \text{Stock} \hspace{36pt} \text{Earnings}\\ d. provide minimum incomes for, Consider the following changes in the economy. The government taxes nominal interest income at a rate of 10%. Assuming that the bonds were sold at 100 plus accrued interest on October 1, 2018, prepare the necessary journal entry. = 11860 - 1250 + 600 = 11210 |Year|Price of Meat|Price of a Toy |2004|$3 per pound|$2 |2005|$1 per pound|$7 |2006|$4 per pound|$5 Refer to table. b. If the product made by the labor sells at a price of P=$8 per unit, then the Marginal Revenue Product of, If the economy is producing a combination of goods inside its production possibilities frontier, then a. workers are on vacation b. a significant number of workers have little education c. some resources are being wasted d. technology must improve before, Suppose the marginal product of labor is 12 and the marginal product of capital is 24. You have 3 workers: worker A, B, and C. Worker A can produce 4 tables or 8 chairs in one day. Suppose that in this economy, there is a pla, The market supply of labor is A) The sum of all jobs created in the economy B) Different for each individual based on training and education levels C) The total of all goods produced in the economy, Assume the economy can be described by the following set of equations: C/\bar{Y} = 0.4 +0.8\bar{Y}\\ I/\bar{Y} =0.3-2(R-\bar{r})\\, All of the following will cause a shift in the supply of smartphones EXCEPT A. an increase in the cost of producing smartphones. Is the purchase of a final good Suppose that a simple economy produces only the following four goods and services: shoes, hamburgers, shirts, and cotton. All other trademarks and copyrights are the property of their respective owners. For example, in 2017, the money supply was $360, the price of a pie was $9.00, and the economy produced 800 pies. The following table contains information on the economy's money supply, velocity of money, price level, and output. b. multiproduct firms will enjoy a cost advantage because they have the opportunity to divide their pool of worker, Consider three firms: firm A, a mining enterprise; firm B, a steelmaker; firm C, a car-maker. Year CPI 2010 98 2011 100 2012 106 2013 107 a. The value of leisure is not included in GDP. The inflation rate from 2011 to 2012 was __________ (5%/2.44%/1.44%/105). The Nominal GDP for the year 2015 is $7450. If the equilibrium quantity of airplanes demanded is 200, can this economy take full advantage, The table below shows how the average cost of production for airplanes at a certain factory changes as the number of airplanes built at that factory increases. Our experts can answer your tough homework and study questions. Since cell phone output the change in the money supply was reflected money + 2017 to 2018 was. \hspace{28pt} \text{NA} \hspace{29pt} \text{-4,500} \hspace{40pt} \text{NA} \hspace{55pt} \text{NA} \hspace{45pt} \text{-4,500}\\ (Part A) You know that you are operating in a monopolistically competitive market, that is, you are a small part. c. decide how much government regulation there should be. What are consumer goods? For example, in 2017, the money supply was $320, the price of a cell phone was $8.00, and the economy produced 600 cell phones. You can produce 30 units that you can sell, The first principle of economics is that people face trade-offs. Explain briefly why an economy that c. The table below provides information about an open economy with the public sector. Since cell ph Change in the money supply was reflected partially did not change from 2017 to 2018 and the velocity of in changes in the price level. \\ (a). Fill in the missing values in the following table, selecting the answers closest to the values you calculate. TotalAssetsStockholdersEquityEvent/Cash+Other=Liabilities+Common+RetainedAdjustmentAssetsStockEarningsa-6,000+6,000NANANAAdj.NA-4,500NANA-4,500. In 2016, the economy produced 85 f, Consider a firm with the production function, q=(K^1/2+L^1/2)^2. Economy A has a high average rate of time preference relative to economy B?s low average rate of time preference. As we read this unit, how does the circular flow model illustrate how our economy works? What is the per-worker production function? Denim pants 80 $40 100 $50 If th, Suppose that this year's velocity is 10, nominal GDP (PY) is $50 billion, and real GDP (Y) IS $10 billion. Draw a graph of the money market to illustrate the effect of the Fed purchases government, Consider the following information describing a closed economy with no government and where aggregate output is demand determined 1. the equilibrium condition is Y = C + I 2. the marginal propensity, Refer to the table above, Consider a simple economy with two countries, the United States and India. Draw graphs to support your answer. Price \ of \ cell \ phones \ (2012) \ = \ \dfrac{3,780}{500} a) The GDP of this country would be $150 million. What is t, Both Kate and John own saltwater taffy factories. The firm has 10 units of capital in the short run. Few foreign firms maintain facilities in the U.S. while many U.S. firms are currently operating abroad. E. If a company follows a policy of matching maturities, this means that it matches its use of short-term debt with its use of long-term debt. b) What is the optimal ratio of c, When an economy is on the flat portion of its AS curve: A. small changes in the price level have little or no effect on the amount of production in the economy. b. determine how large the budget deficit should be. The following table contains information on the economy's money supply, velocity of money, price level, and output. Consider a simple economy that produces only cell phones. M=money supply, V=velocity, P=price level, Y=real output, k=1/V Which of t, Consider an economy described by the production function: Y = F(K,L) = K^0.4 L^0.6 a. Carrie's marginal utility per dollar from increasing cons. The nominal interest rate on the bonds adjusts automatically to account for the inflation rate. Nominal GDP (Dollars) Year Velocity of Money Quantity of Money (Dollars) 200 202 Price Level Quantity of Output (Dollars) (Pens) 5.00 400 400 2017 2018 The money supply grew at a rate of from 2017 to 2018. For example, in 2011, t, a. Consider the following closed-economy IS-LM model: Consumption function Investment function Government purchases and taxes Money demand function Money supply Price level : C = 800 + 0.80 (Y - T) : I, Suppose that some CPI data for a particular economy is shown in the following table. a. not change GDP or the category under which the spending is counted. For example, in 2012, the money supply was $280, the price of a pen was $7.00, and the economy produced 600 pens. GDP is not adjusted for crime or other social problems. Use the information in the following table to calculate Nominal Gross Domestic Product (Nominal GDP) for 2015. Nominal GDP can increase if output falls and prices rise. The country has a constant technology, population and capital stock (in other words, real GDP is constant throughout). Calculate the amount for consumption.