My Blog

Category: Economics

  • (Answered) The following model can be used to study whether campaign expenditures affect election…

    The following model can be used to study whether campaign expenditures affect election outcomes:
    voteA = β0 + β1 log(expendA) + β2 log(expendB) + β3 prtystrA + u
    where voteA is the percentage of the vote received by Candidate A, expendA and expendB are campaign expenditures by Candidates A and B respectively, and prtystrA is a measure of the party strength for Candidate A (the percentage of the most recent presidential vote that went to Candidate A’s party).
    (i) True or False: If Candidate A’s expenditures increase by one percent, voteA will increase by approximately β1 percentage points.
    True    False
    (ii) True or False: In terms of the parameters, the null hypothesis that a 1% increase in Candidate A’s expenditures is offset by a 1% increase in Candidate B’s expenditures is: H0: β1 = −β2.
    True    False
    (iii) Use OLS to estimate the following model: voteA = β0 + β1 log(expendA) + β2 log(expendB) + β3 prtystrA + u.
    The estimated equation is: voteA^ = + log(expendA) + log(expendB) + prtystrA.
    True or False: As both the coefficient on log(expendA) and the coefficient on log(expendB) are statistically significant (at the 1% significance level), campaign expenditures by Candidates A and B have an effect on the percentage of the vote received by Candidate A.
    True    False

  • (Answered) QUESTION 25What is found in Arthur Laffer’s model of the macro economy?A. The trade-off between the…

    QUESTION 25
    What is found in Arthur Laffer’s model of the macro economy?
    A. The trade-off between the MPC and the MPS.
    B. The trade-off between inflation and unemployment.
    C. The spending multiplier.
    D. The tradeoff between leisure and all other economic goods.
    E. None of the above is in his model.
    QUESTION 26
    Suppose goif ball workers in lapan earn 112 per houl, while goif bal workers in the Thilpgines earn 36 per hour on anerage. Aasume these workers in japan are 3 smes more productive then workers in the Philippines. What happers given free trade and rero Eamsaction coss?
    RWorkers in the Phig ppines wages ofecrease to 54 per hour.
    8. Workers in japan will have their wages fall to 19 per hour.
    C. Workers in Japan will have their wages to $4 per houf.
    D. Nouhing will change.
    C. Workers in the Prilppines wages decrease to $3 per hour.
    QUISTION 27
    What is not true?
    A. Repressed inflation arises when the government accelerates the growth of the money supply and simuluateully impoles maximum price controls.
    B. Cetens Paribus, lower money velocity will lead to deflation.
    C. Monetary policy can permanently lower the real interest rate.
    0. An increased Consumer Price index (CPD) indicates inflation.
    E. The dfference between frictional unemployment and cyclical unemployment is that frictional unemployment exsts even in a general equilibrium whereas cyclical unemployment exists only in a recession.

  • (Answered) 4. Specialization and trade When a country has a comparative advantage in the production of a good,…

    4. Specialization and trade
    When a country has a comparative advantage in the production of a good, it means that it can produce this good at a lower opportunity cost than its trading partner. Then the country will specialize in the production of this good and trade it for other goods. The following graphs show the production possibilities frontiers (PPFs) for Yosemite and Rainier. Both countries produce peas and basil, each initially (i.e., before specialization and trade) producing 18 million pounds of peas and 9 million pounds of basil, as indicated by the grey stars marked with the letter A.Yosemite has a comparative advantage in the production of peas, while Rainier has a comparative advantage in the production of basilSuppose that Yosemite and Rainier specialize in the production of the goods in which each has a comparative advantage. After specialization, the two countries can produce a total of million ____ pounds of peas and ___million pounds ofbasil.
    Note: Dashed drop lines will automatically extend to both axes.
    Consumption After Trade
    The following graph shows the same PPF for Rainier as before, as well as its initial consumption at point A.
    True or False: Without engaging in international trade, Yosemite and Rainier would not have been able to consume at the after-trade consumption bundles. (Hint: Base this question on the answers you previously entered on this page.)
    True
    False

  • (Answered) 22Mrs. Renfro’s, Inc., sells 25 different relishes in 45 states. Mrs. Renfro’s chipotle corn salsa…

    22Mrs. Renfro’s, Inc., sells 25 different relishes in 45 states. Mrs. Renfro’s chipotle corn salsa is so popular that the company cannot make enough to keep its resellers stocked. Its price of $4.50 for a jar seems just right to consumers who savor its hot and spicy taste. The popularity of hot and spicy food is an example of a that Mrs. Renfro’s has taken advantage of to make its product a success.
    Multiple Choice
    barter factor
    demand factor
    supply factor
    consumer index
    macroeconomic environmental factor
    23You can go to your nearest Hallmark card store and buy a birthday greeting card for a friend and pay $4.50. Or you can buy a Hallmark card from its new $0.99 line of greeting cards, made with lesser-quality materials but just as sentimental, sold at Barnes & Noble bookstores. This is an example of
    Multiple Choice
    eBook
    mass customization
    organizational synergy
    one product and multiple market segments
    price discrimination
    a Tiffany/Walmart strategy

  • (Answered) 123456789101112131415Specialization123456789101112131415Currency…

    Specialization
    Currency appreciation
    The U.S. has recently imposed duties on Chinese steel accusing the country of supplying the product at artificially low prices which are below the cost of production. If China is in fact doing this, the practice is called ______
    Trade restrictions
    David Ricardo
    Absolute Advantage
    Imports exceed exports
    Currency depreciation
    In August 2018, the U.S. imported $297 million and exported $703 million worth of nuts
    Comparative Advantage
    1.Results from a country’s ability to produce a good or service at a lower opportunity cost than others
    2.Trade deficit occurs
    3.Leads to a decline in export and a rise in import
    4.Tariffs and quotas
    5.Results from a country’s ability to produce a good or service more efficiently than others
    6.When a country moves resources to producing goods and services in which it has comparative advantages
    7.Encourages export
    8.All countries including those which may be relatively inefficient benefit from specialization and free trade
    9.Intra-industry trade
    10.Dumping
    11.Retaliatory measure
    12.Budget deficit
    13.Competitive advantage
    14.Since efficiency is the basis for trade, countries must focus on producing goods and services in which they have absolute advantage.
    15.Example of value chain

  • (Answered) Consider the two-period endowment model discussed in the lectures where the economy is populated by…

    Consider the two-period endowment model discussed in the lectures where the economy is populated by m consumers and a government. The agents derive utility from consumption in the current and future period. The utility is well behaved. Suppose that the government, instead of borrowing in the current period, runs a government loan program. That is, loans are made to consumers at the market real interest rate r, with the aggregate quantity of loans made in the current period denoted by L. Government loans are financed by lump-sum taxes on consumers in the current period (denoted by T ), while government spending is zero in both periods (i.e., G= G’=0 ). In the future period, when the government loans are repaid by consumers, the government rebates this amount as lumpsum transfers (negative lump-sum taxes) to consumers. Finally, each consumer shares an equal amount of the total tax burden (or of the total transfer benefit) in the current and future period.
    (a) Write down the government’s current period budget constraint and its future period budget constraint.
    (b) Determine the present value budget constraint of the government.
    (c) Write down the lifetime budget constraint of a consumer.
    (d) Define the competitive equilibrium.
    (e) List the full set of conditions characterising the competitive equilibrium given the exogenous variables.
    (f) Argue why or why not Ricardian equivalence holds in this setup.

  • (Answered) In a restaurant somewhere in Canada, a customer emits a negative consumption externality as a…

    In a restaurant somewhere in Canada, a customer emits a negative consumption externality as a result of vaping, leading to health costs for nearby patrons by way of reduced air quality and possible toxins inhaled due to passive smoke. The private market demand and supply functions for vapes is given by:
    QD = 90 – 2P
    QS = -10 + 8P
    where QD and QS are quantities demanded and supplied, respectively, and P is the private market price. Each unit of consumption of vapes generates an external cost of $4, which is not reflected in the market demand function.
    (a) Calculate the equilibrium price and quantity in the absence of any government intervention.
    (b) Using the marginal social benefit function, calculate the socially optimal quantity, the new seller price, and the new consumer price. (Note: The external cost should incorporate a per unit tax of $4 per vape. The seller price (price the seller receives after the tax) will be lower than the equilibrium price calculated in part (a) and the buyer price (price paid by the vape consumer) will be higher than the equilibrium price calculated in part (a)).
    (c) Illustrate using a supply and demand diagram i) market equilibrium, ii) the social benefit function, iii) deadweight loss and iv) tax amount for this negative consumption externality. Clearly label the relevant areas using the calculations from parts (a) and (b).

  • (Answered) Consider the competitive market for rhenium. Assume that no matter how many firms operate in the…

    Consider the competitive market for rhenium. Assume that no matter how many firms operate in the industry, every firm is identical and faces the same marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves plotted in the following graph. Use the orange points (square symbol) to plot the initial short-run industry supply curve when there are 10 firms in the market. (Hint: You can disregard the portion of the supply curve that corresponds to prices where there is no output since this is the industry supply curve.) Next, use the purple points (diamond symbol) to plot the short-run industry supply curve when there are 20 firms. Finally, use the green points (triangle symbol) to plot the short-run industry supply curve when there are 30 firms. If there were 10 firms in this market, the short-run equilibrium price of rhenium would be per pound. At that price, firms in this industry would. Therefore, in the long run, firms would the rhenium market.Because you know that competitive firms earn – economic profit in the long run, you know the long-run equilibrium price must be per pound. From the graph, you can see that this means there will be firms operating in the rhenium industry in long-run equilibrium.True or False: Assuming implicit costs are positive, each of the firms operating in this industry in the long run earns negative accounting profit.TrueFalse

  • (Answered) Based on this definition, indicate which of the following transactions will be included in (that…

    ➤ How do imports affect U.S. GDP calculations?
    Imports do not add to U.S. GDP because GDP measures domestic output. A gaming controller produced in Japan and imported into the U.S. is excluded from U.S. GDP. When households buy imports, statisticians subtract imports in the expenditure approach, so foreign production does not raise U.S. GDP.

  • (Answered) Eleanor works as a private tutor on evenings and weekends. She has no fixed costs, and her…

    Eleanor works as a private tutor on evenings and weekends. She has no fixed costs, and her opportunity cost of giving a tutoring session is $25.
    She has nine potential students each week whose willingness to pay are shown in the following table:
    Students (Sessions per week)
    Willingness to Pay (Dollars per tutoring session)
    Total Revenue (Dollars per week)
    Marginal Revenue (Dollars per tutoring session)
    1
    2
    3
    4
    5
    6
    7
    8
    9
    If Eleanor has to charge a single price to all of her students, she will maximize her profit by giving tutoring sessions. This is than the efficient number, which is tutoring sessions.
    If Eleanor can practice perfect price discrimination, she should give tutoring sessions.
    Now suppose Eleanor cannot practice perfect price discrimination, but she is able to find a hurdle that identifies the group of students who are willing to pay at least $34 for a tutoring session (the
    )