Tag: Economics – Others

MINI CASE: Trends in China’s Balance of Payments
Over the past decades, China has emerged as a global economic powerhouse. In 2020, China was the second-largest economy after the United States, with a nominal GDP of $14.7 trillion. The state of China’s economy, including that of China’s balance of payments, has generated much discussion and debate among economists, policy makers, and market participants.
Analyze the data on China’s balance of payments from 1982 through 2020 posted in the online databank and write a report on the subject. In the report, you may:
Document the trend in China’s key economic indicators, such as the economic growth rate, the share of consumption in output, and exchange rate from 1982 to 2020.
Analyze the trends in China’s current account and its sub categories and investigate their causes. For example, how have the balances on goods and services trade changed over time, respectively?
Analyze the trends in China’s financial account and its sub categories and investigate their causes.
Examine the trend in China’s reserve holdings and discuss the likelihood of China’s twin surplus returning in the future. A twin surplus occurs when a country maintains surpluses on both current and financial accounts.

B. Exercise
Consider a situation in which there are just two countries: an Origin, and a Destination country.
Labor demand in the origin country is given by: wo=10-Lo
Labor demand in the destination country is given by: wd=14-Ld where Lo and Ld indicate the number of workers in the origin and destination countries, respectively.
2 Initially, there are 6 workers in the origin country and 4 workers in the destination country. Assume that labor supply is perfectly inelastic in both countries (that is, that labor supply can be represented through a vertical line).
Consider first the case in which individuals are not able to change their country of residence. What would be the equilibrium wage in the destination and in the origin countries?
Consider next the case in which workers can freely migrate across countries (at no cost). What would be the equilibrium wage in the destination and in the origin countries? How many workers (if any) would migrate from the origin to the destination country?
The government in the destination country is worried about the potentially negative effects of immigration on the labor market. To address this issue, the government is considering the introduction of a

You are asked to solve the following Linear Programming (LP) problem.
Objective:
Maximize 1.50A + 3.00B
Subject to the following constraints:
3 A + 2 B ≤ 600
2 A + 4 B ≤ 600
A + 3 B ≤ 420
A ≥ 0
B ≥ 0
a. (15 points) Graphical Solution
Plot the constraints on the grid provided below.
Clearly identify the feasible region and label its corner points.
Show all calculations and explain how you identified the feasible region and corner points.
Once you complete the graph, copy and paste it as a screenshot (using PrintScreen) into your report.
b. (20 points) Analytical Solution
Calculate and report the optimal product mix (i.e., values of A and B ) that maximizes the objective function.
Clearly explain how you arrived at this solution.
e. (15 points) Excel Solver Solution
Reproduce this problem in Excel and solve it using Excel’s Solver.
Include two printouts as exhibits at the end of your report:
The Excel Solver Sheet showing your model setup and solution.
The Solver Answer Report generated by Excel.
(You may insert screenshots using PrintScreen).

Match the following explanations of terms and concepts appropriately.
The market demand curve equals the vertical sum of each consumer’s demand for that good. The efficient level is where the◻market demand curve intersects the marginal cost curve – that is, where the st. of the marginal valuations equal the marginal cost.
The free-rider problem occurs because people try to benefit from public goods without paying for them.
Taving people according to their marginal valuations of ti
A stance adopted by voters who find that the cost of understanding and voting on a public good may be efficient, but it may ne be fair if the ability to pay differs. Thus, public goods are more complicated than private goods in terms of what goods should be provided, in what quantities, an who should pary. particular issue usually exceeds the expected benefit of doing so.
All market activity that goes unreported to the government either to ayoid taxes or because the activity is ilegal.
These are are government departments ans agencies charged with implementing legslatione they are financed by
Choices:
Rational Ignorance
Optimal Provision of Public Goods
Illegal Economy
The Underground Economy
Bureaus
Paying For Public Goods
Agencies

The goal of this problem is to study Ban-the-Box policies and whether they help felons or hurt non-felon minorities. Consider a firm looking to hire a worker. The firm pays a fixed wage for a given position w > 0, and can hire a worker from Group 1 or Group 2. The firm can determine whether an applicant is from Group 1 or Group 2 at no cost. Unfortunately, a fraction λ of Group 1 workers are felons (F), which the firm is averse to hiring. Non-felons (N) comprise a fraction (1 − λ).
The firm’s payoff π is:
π = { π_F − w if it hires a felon from Group 1; π_2 − w if it hires a worker from Group 2; π_N − w if it hires a non-felon from Group 1; 0 if it does not hire. }
Question 1. Who would the firm hire if it is able to distinguish felons from non-felons? Who would the firm hire if it is not able to distinguish felons from non-felons? Comment.
Question 2. How much would the firm be willing to pay to screen the candidate? I.e., be able to tell whether the candidates from Group 1 are felons or not? Would such a screening technology exist in an unregulated market?
Question 3. You can think of this screening technology as

The classical dichotomy is the separation of real and nominal variables. The following questions test your understanding of this distinction.
Hannah divides all of her income between spending on puzzle books and lattes. In 2016, she earned an hourly wage of $28.00, the price of a puzzle book was $7.00, and the price of a latte was $4.00.
Which of the following give the real value of a variable? Check all that apply.
Hannah’s wage is $28.00 per hour in 2016.
The price of a puzzle book is $7.00 in 2016.
The price of a puzzle book is 1.75 lattes in 2016.
Which of the following give the nominal value of a variable? Check all that apply.
Hannah’s wage is 4 puzzle books per hour in 2016.
The price of a latte is 0.57 puzzle books in 2016.
The price of a latte is $4.00 in 2016.
Suppose that the Fed sharply increases the money supply between 2016 and 2021. In 2021, Hannah’s wage has risen to $56.00 per hour. The price of a puzzle book is $14.00 and the price of a latte is $8.00.
In 2021, the relative price of a puzzle book is .
Between 2016 and 2021, the nominal value of Hannah’s wage , and the real value of her wage .
Monetary neutrality is the proposition that a change in the money supply nominal variables and real variables.

In 2004, the World Wildlife Foundation (WWF) helped set up the Roundtable on Sustainable Palm Oil (RSPO), a group that includes every link in the global supply chain, from growers and processors to food companies, retailers, and investors. With the RSPO, the WWF developed a set of international standards for responsible palm oil production. Producers who show they meet these criteria are able to sell certified sustainable palm oil (CSPO). That means companies that then use that oil for products such as lipstick, soap, or margarine can make the same guarantee to their customers.
WWF believes that consumers should purchase CSPO whenever possible, rather than simply boycotting palm oil. Why is purchasing products that contain CSPO a more environmentally and economically sustainable alternative to boycotting all products that contain palm oil?
Group of answer choices
CSPO increases smallholder profits and does not contain byproducts of endangered animals
CSPO improves smallholder yields and profits and decreases the environmental impact of deforestation
CSPO increases smallholder yields and profits while also increasing air and soil pollution
CSPO increases the salaries of smallholders while decreasing the number of carbon sinks in tropical regions

2. Global warming is associated with more frequent and severe heat waves and an increase in heatrelated mortality due to heart disease, strokes, and respiratory problems. A city prone to extreme heat episodes is considering implementing a heat warning system (HWS) that would reduce health risks by providing alerts to residents and health-care workers along with guidance on how to adjust behaviour during dangerous hot episodes. A BCA will be conducted to determine the HWS’s feasibility. The benefit, in terms of avoided heat-related premature mortality (heat-related excess deaths in otherwise healthy individuals who die earlier because of heat exposure), is to be estimated using the VSL (value of a statistical life) valuation method. Implementing a HWS is expected to reduce heat-related premature deaths from 1 out of 100,000 to 1 out of 200,000 people. A random sample of the city’s residents were surveyed. The results revealed an average willingness to pay of $10 for this risk reduction. Using the VSL valuation method to estimate the benefit of implementing the HWS, if the cost of the risk reduction is estimated to be $1.75 million would implementing the HWS be justified? Explain showing your calculations. [3 marks]

Femi’s HookNLadder is the only company selling fire engines in the fictional country of Alexandrina. Femi initially produced six trucks, but then decided to increase production to seven trucks. The following graph gives the demand curve faced by Femi’s HookNLadder. As the graph shows, in order to sell the additional fire truck, Femi must lower the price from $100,000 to $50,000 per truck. Notice that Femi gains revenue from the sale of the additional engine, but at the same time, he loses revenue from the initial six engines because they are all sold at the lower price. Use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial six engines by selling at $50,000 rather than $100,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $50,000. Femi increase production from 6 to 7 fire engines because the dominates in this scenario.
True or False: If alternatively Femi’s HookNLadder were a competitive firm and $100,000 were the market price for an engine, increasing production would not affect the price at which the company is able to sell engines.
True
False

Assume a firm is a monopolist in the output market (facing a product demand curve of p = 967 – 5Q) and purchases labor in a competitive labor market at a wage rate of w. The production function is Q = K 0.25 L. The capital is fixed at 12455 in the short-run.
a) Solve for the profit-maximizing quantity (Q) and price (p) and the quantity of labor (L) as a function of the wage rate (w) in the short run.
b) Assuming that the supply curve for labor is given as L=4+w, find the equilibrium labor quantity (L) and wage (w).