Tag: Economics – Others

Week 1 News Analysis: Border Security Tradeoffs
Suppose the first bill that is introduced mandates that security be improved so that the probability of catching a terrorist at the border increases from 10% to 15%. Assuming the security bill does not change the position of the blue curve, place the gray point (star symbol) on the graph to show the effects of such a bill. (Hint: Be sure to plot your point on one of the black plus symbols.)
The opportunity cost of this increase in security is ◻ million visitors per year.
Suppose the first bill is passed, raising the probability of catching any given terrorist from 10% to 15%. However, this isn’t enough for some lawmakers. One representative introduces a bill that would increase security by an additional 15 percentage points.
Again, assume these measures do not change the position of the blue curve. The opportunity cost of this additional measure is ◻ million additional visitors per year.
Refer back to your previous answers. The opportunity cost of increasing the probability of catching a terrorist from 15% to 30% is ◻ the opportunity cost of increasing that probability from 10% to 15%.

The table below shows the hourly output per worker in two industries in Chile and Argentina. Use this table to answer the following questions.
Output per hour of work
Hats
Beer
Chile
8
6
Argentina
1
2
Part 2 a. Argentina Chile has an absolute advantage in the production of hats, and Argentina Chile has an absolute advantage in the production of beer.
Part 3 b. Argentina Chile has a comparative advantage in the production of hats, and Argentina Chile has a comparative advantage in the production of beer.
Part 4 c. Suppose that Chile and Argentina currently do not trade with each other. Each has 1,000 hours of labor to use for producing hats and beer, and the countries are currently producing the amounts of each good shown in the table below. Using this information, give a numerical example of how Chile and Argentina can both gain from complete specialization and trade. Assume that after trading begins, one hat can be exchanged for one barrel of beer.
Current production (no trade)
Hats
Beer
Chile
7,200
600
Argentina
600
800
Complete the table below. The table represents the amount of hats and beer after trading for each country (enter your responses as integer values).
Hats
Beer
Chile
enter your response here
600
Argentina
600
enter your response here

Applifallipe: Elasticity and hotel resms
table
Bemand Facter
Initial Walue
Average American househald income
340,000 per par
Evend trip airfare from New York (JFK) to Las wegas (Las)
Batifuer muns sye
Rosem rate at the Lucky Hetel and Casins, which is near the sig, Winner
$250 per nuye
Market for Big Winner’s Hotel Resoms
Demand Factors have two ment diflens: LES, pipllan per none twi Noom Nate ut lucky, meless perso
For thich of the following scenarios, begin by assuming that all demand flactors ave set to their original walues and that Big Winner is Cherphe 5350 per room per night.
If average household incleme increases by 50%, from $40,000 to $60,000 per yeas the fuancity of reoms demanded as the Big Winner q, from ◻ rooms per night top ◻ reams per night. Therefore, the income elanticity of demand in ◻ , . meaning the nater in ours at po Big Winter are ◻ Quantify of rooma demanded at the lig Winner q, from ◻ reams per night to ◻ reoma per night. Because the cress elestioly of demand is ◻◻ : total revenue to ◻◻ – portion of res demand ourve.
FILL IN BLANK DROP DOWN OPTIONS:
(falls or rises)
(negative or positive)
(falls or rises)
( negative or positive )
(substitutes, complements)
(decrease, increase)
(elastic or inelastic)

1 Assume labor and capital are purchases in a perfectly competitive market, and the end product Is sold in a perfectly competitive market LABOR p = $4 KAPITAL P =$6 Labor total marginal total MRP Kapital total marginal total MRP prod prod rev labor prod rev rev kapital
0 0 0 0
1 16 $32 1 24 $48
2 28 $56 2 41 $82
3 38 $76 3 53 $106
4 46 $92 4 63 $126
5 53 $106 5 72 $144
6 59 $118 6 80 $160
7 63 $126 7 83 $166
8 65 $130 8 84 $168
A At an output level of 99, what is the cost minimizing amount of L & K? 9pts
B At an output level of 131 what is the cost minimizing amount of L & K? 9 pts
C If the price of the product is $2.00, what is the profit maximizing level of L & K? What is the total profit? 7pts
2. Let’s take another look at the minimum wage.
a Is the minimum wage a price ceiling or price floor? Show this on a graph. Point out or describe any inefficiencies with regard to price and quantity. + 5 pts
b Is the minimum wage similar to any of the union models in chp 17? If so which one? +5 pts
c Is there a different result for minimum wage, which you outlined in #1, if monopsony or monopsonistic power is injected into the analysis, AND your answer to #2? What might that be? Is there a different result for equilibrium price and wage you outlined in #1. If so, what would that be ? 15 pts

The Phillips curve in the late 20 th century
The following table shows selected data on unemployment and Inflation in the United States between 1974 and 1978.
Year
Unemployment Rate (Percent)
Inflation Rate (Percent)
1974
5.6
11.0
1975
8.5
9.1
1976
7.7
5.8
1977
7.1
6.5
1978
6.1
7.6
Plot the data for these flue years on the following graph. Note: You will not be graded on how you plot the points, but plotting the points accurately on the graph will allow you to examine the relationship between unemployment and inflation during this period and solve the problems that follow.
Which of the following statements best describes the relationship between inflation and unemployment in the United States during this time period?
The short-run Phillips curve remained stable.
The short-run Phillips curve shifted to the left after actual inflation was lower than expected.
The short-run Phillips curve shifted to the right after actual Inflation was higher than expected.
The following graph shows the short-run Phillips curve (SRPC) for the United States In 1974. Shift the curve to Mustrate what happened between 1974 and 1978.
The following graph shows the aggregate demand (AD) and short-run aggregate supply (SRAS) curves for the United States in 1974. Shift the aggregate supply curve to approximate what happened between 1974 and 1978.

1. In the short run specific factors model, examine the impact on a small country following a natural disaster that decreases its population. Assume that land is specific to agriculture and capital is specific to manufacturing, whereas labour is free to move between the two sectors.
a. In a diagram, determine the impact of the decrease in the workforce on the output of each industry and the equilibrium wage.
b. What happens to the rentals on capital and land?
c. How would your answer change if instead we use the long-run model, with shoes and computers produced using labour and capital?
2. In the short run specific factors model, consider a decrease in the stock of land. For example, suppose a natural disaster decreases the quantity of arable land used for planting crops.
a. Draw a diagram showing the initial equilibrium.
b. What is the effect of this change in land on the quantity of labour in each industry and on the equilibrium wage?
c. What is the effect on the rental on land and the rental on capital?
d. Now suppose that the international community wants to help the country struck by the natural disaster and decides to do so by increasing its level of FDI. So now the rest of the world increases its investment in physical capital in the stricken country. Illustrate the effect of this policy on the equilibrium wage and rentals.

Andy and Chris work together at a bakery, making lemonade and iced tea. Andy can make 35 cups of lemonade per hour, 25 cups of iced tea per hour, or a combination of both. Chris can make 16 cups of lemonade per hour, 20 cups of iced tea per hour, or a combination of both. Fill in the blanks for the statements below. If your answer is a number, put it as a decimal. For example, if your answer is 4/3, you should put 1.33. If your answer is a name, spell it exactly as above.
Andy’s opportunity cost of 1 cup of lemonade is ____ cups of iced tea.
Andy’s opportunity cost of 1 cup of iced tea is ____ cups of lemonade.
Chris’s opportunity cost of 1 cup of lemonade is ____ cups of iced tea.
Chris’s opportunity cost of 1 cup of iced tea is ____ cups of lemonade.
____ has the absolute advantage in making lemonade.
____ has the absolute advantage in making iced tea.
____has the comparative advantage in making lemonade.
____has the comparative advantage in making iced tea.
Suppose Andy and Chris are not specialized. Andy is making 21 cups of lemonade and 10 cups of iced tea per hour. Chris is making 12 cups of lemonade and 5 cups of iced tea per hour. If Andy and Chris fully specialize, they will all together make ____ more cups of lemonade per hour and ____ more cups of iced tea per hour.

Why do firms offer efficiency wages? (a) In order to Increase the number of employees (b) In order to cause involuntary unemployment (e) In order to pay employees a higher wage so they are not indifferent about leaving the firm (d) All are reasons firms offer efficiency wages
The AD curve is a function of (a) Expected Inflation (b) Oil Prices (c) Consumption Behavior (d) All of above
Money demand is a function of (a) the risk free interest rate (b) income (e) financial risk (d) All of the above
The labor demand curve would be upward sloping if (a) there was decreasing marginal product of labor. (b) there was increasing marginal product of capital. (c) there was increasing marginal product of labor. (d) there was constant marginal products of labor and capital.
TRUE or FALSE: Investment always equals Savings in the Classical Model? (a) True. (b) False.
TRUE or FALSE: When the LM curve shifts the AD curve always shifts as well. (a) True. (b) False
TRUE OR FALSE: When the IS curve shifts the AD curve always shifts in the same direction. (a) True. (b) False
TRUE or FALSE: Wages (IP) is a nominal variable in our AS/AD model. (a) True. (b) False
TRUE or FALSE: endogenous capital implies that LRAS is a function of Is. (a) True (b) False

As the GATT and WTO have evolved, the trade rounds have become:
Stayed about the same in length of negotiating time
Shorter in length of negotiating time
Longer in length of negotiating time
Flag question: Question 3 — 0.1 pts
The WTO seeks to promote economic stability and prevent crises; to help resolve crises when they do occur; to promote growth and alleviate poverty; and monitor national monetary systems (surveillance).
True
False
Flag question: Question 4 — 0.1 pts
Some of the harshest critics of organizations such as the WTO, IMF, and World Bank have been Europeans, Wall Street and Neoliberals.
True
False
Flag question: Question 5 — 0.1 pts
Which of the following organizations is an IGO dealing with trade?
ITU
IAEA
WTO
IMF
Flag question: Question 6 — 0.1 pts
Congress approved GATT in 1947.
True
False
Flag question: Question 7 — 0.1 pts
The IMF is essentially the central bank to the world, with a managing director who is always a European.
True
False
Flag question: Question 8 — 0.1 pts
The IMF lends money on a short term basis to stabilize a country’s economy, but it does so with requirements called

20a.
Each member of the Board of Governors of the Federal Reserve System is selected by:
a. the U.S. president and confirmed by the Senate.
b. the Supreme Court and confirmed by the Senate.
c. the U.S. president and confirmed by the Supreme Court.
d. the Chairman of the Banking Committee and confirmed by the Senate.
b.
The Board of Governors of the Federal Reserve System:
is the largest bank in the United States.
coordinates policies for the 12 Federal Reserve Banks.
is made up of five members.
is replaced every 2 years.
c.
The Federal Open Market Committee (FOMC) includes:
the Chairman of the Federal Reserve Board of Governors and 7 of the 12 presidents of the Federal Reserve Banks, of which the president of the New York Fed has a permanent voting seat.
members of the Board of Governors and 5 of the 12 presidents of the Federal Reserve Banks, of which the Chairman of the Federal Reserve Board of Governors has a permanent voting seat.
members of the Board of Governors and 5 of the 12 presidents of the Federal Reserve Banks, of which the president of the New York Fed has a permanent voting seat.
members of the Board of Governors, 7 of the 12 presidents of the Federal Reserve Banks, and the president of the United States.