Tag: Economics – Others

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).

Consider an imaginary price index, the Undergraduate Price Index (UPI), created to represent the annual purchases made by a typical undergradute. The following table contains information on the market basket for the UPI and the price of each good in 2020, 2021, and 2022.
The cost of each good in the basket as well as the basket’s total cost are given for 2020. Perform these same calculations for 2021 and 2022, and enter the results in the following table.
Price (Dollars)
Cost (Dollars)
Price (Dollars)
Cost (Dollars)
Price (Dollars)
Cost (Dollars)
Suppose this price index uses 2020 as the base year.
In the last row of the table, calculate and enter the value of the UPI for the remaining years.
Between 2020 and 2021, the UPI increased by . Between 2021 and 2022, the UPI increased by
Which of the following, if true, would illustrate why price indexes such as the UPI might overstate inflation in the cost of going to college? Check all that apply.
Professors required each student to buy 10 textbooks, regardless of the price.
A new, cheaper internet option rolled out services nationwide.
Energy drinks became increasingly popular on college campuses between 2020 and 2022 due to significant improvements in flavor, but

Consider an economy, starting from the below full employment equilibrium denoted as point A. Please label variables clearly.
Draw an aggregate demand and aggregate supply (AD-AS) dagram to show that the economy is Initially below full employment equilititum (denoted as a point AN during the COVID19 in March 2020.
From question (a). IT the US central bank (Fefl) conducts open market purchase or buys bonds, how does this situation affect the AD-AS dagram? What will happen to the equilibrium price level and real GDP in the short run? Explain your answer. (Please write the new equilibrium point denoted as the point B)
From question (a), assume that nelther the Fed nor the sovernment imposes any pollicies to simulate the economy. According to the consept of seil-correction, in the long run, what will happen in the economy? How is the economy being improved? Explain it in words and graphically, using AD-AS diagram?
From guestion (a) how does government use fueal polloy to maintain full employment. using AE model and AD-AS digram? What is the new ceptitum of real GOP if the sovernment increases spending by $8.8 trillion when the MPC is 0.3 the government consumption multiplier was around 0.8 in 2020

Lizzy Pope and Jean Harvey found that offering​ first-year university students money to go to the gym on a regular basis increased gym attendance in the fall semester between 49 and 51 percent and by 36 percent in the spring semester. They also found that the impact of the monetary incentive decreased when the number of trips required to get paid increased from 2 per week to 5 per week.
Part 2a. Why might a monetary payment affect whether or not people go the gym when the health benefits of physical activity are so well​ documented?
A.Using a gym is likely to have negative effects on​ someone’s health. The monetary payment is necessary because there are no​ health-related incentives for going to the gym.
B.When deciding whether or not to go to the​ gym, people are comparing what they miss out on and the relatively small benefit any single workout will have on their overall health. The monetary payment creates an incentive for each individual workout.
C.Health benefits cannot be considered as incentives. Incentives apply only to monetary values. People only consider monetary effects before taking action.
D.The monetary payment will have a negative effect on whether people decide to go to the gym.

The exchange of goods and services within the global community is very dynamic most of the time.
Question 1 options:
True
False
Question 2 (5 points) As one nation increases output for export, the costs eventually begin to increase because of the law of increasing cost (costs of production rise as as output increases because the most efficient input resources are used first and then less efficient input resources must be employed)
Question 2 options:
True
False
Question 3 (5 points) Check each of the following that apply to this situation: America can produce 30 smoothies or 30 salads in one hour. Canada can produce 6 smoothies or 30 salads in one hour
Question 3 options:
before any trading, America should specialize and make 30 smoothies and 0 salads and Canada can make 0 smoothies and 30 salads
an exchange ratio within 1 salad < smoothie < 5 salads is beneficial to both countries if both countries agree on an exchange rate of 10 smoothies = 30 salads, both countries can benefit from trade after trade, America can now have 30 smoothies OR 90 salads, while Canada can now have 10 smoothies OR 30 salads. This would mean that both countries are better off than they were without trade.

B.1-1: Moving toward Long-run Equilibrium
Consider a perfectly competitive industry in the diagram below. The left panel of the diagram depicts the industry’s aggregate supply and demand curves, currently at S
1
and D
1
, respectively. The right panel of the diagram depicts the cost curves of a typical profit-maximizing firm in this industry. Since we are dealing with long-run adjustments, all inputs are variable and, thus, the ATC curve is the same as the AVC curve.
Market Quantity, Q (in millions) Representative Firm Quantity, q (in thousands)
What is the industry’s equilibrium price and quantity? (Hint: left panel)
Answer: P* = Q* = M Units
What is the firm’s profit-maximizing output quantity, q*? (Hint: right panel)
Answer: q* = K Units
Given q*, what is firm’s total cost per unit of output?
Given q*, what is the firm’s profit per unit of output? (Include a minus sign as needed.)
What is the firm’s total profit? (Include a minus sign as needed.)
Given your answer in (5), will there be entry or exit?
Answer:

For each statement below, state whether it is true or false.
If there are diminishing returns, the marginal cost curve must be positively sloped.
True
False
Marginal costs decrease as output increases because the firm can spread fixed costs over more units.
True
False
If average cost is increasing, marginal cost must be increasing.
True
False
For each production function below, indicate returns to scale.
Q = 10 + 5L + 5K
decreasing returns to scale
constant returns to scale
increasing returns to scale
Q = L0.4K0.7
decreasing returns to scale
constant returns to scale
increasing returns to scale
Q = L0.6K0.4
decreasing returns to scale
constant returns to scale
increasing returns to scale
Q = 5L + 5K + 5LK
decreasing returns to scale
constant returns to scale
increasing returns to scale
Q = L0.3K0.3N0.3
decreasing returns to scale
constant returns to scale
increasing returns to scale

Absolut and Comparative Advantage
Time Needed to Build 1
Bike
Computer
Matt
6 Hours
3 Hours
Tom
2 Hours
2 Hours
Who has the absolute advantage in bike building?
Who has the absolute advantage in Computer building?
Opportunity Cost of Building 1
Bike
Computer
Matt
2 Computers
.5 Bikes
Tom
1 Computer
1 Bike
Using the information above, who has the comparative advantage in building Bikes?
Using the information above, who has the comparative advantage in building Computers?
For the next questions assume Matt and Tom each specialize in production where they have their comparative advantage and are both given 120 Hours to produce these goods.
5. What does Matt produce and how many units does he produce?
6. What does Tom produce and how many units does he produce?
To have some of each good Tom gives Matt 20 Bikes and Matt gives Tom 30 Computers
7. How many of each item does Tom have after the trade? Could he have produced this mixture of goods in 120 hours?
8. How many of each Item does Matt have after the trade? Could he have produced this mixture of goods in 120 hours?

Question 6
Voluntary transactions
Always increase wealth for everyone
Are inefficient
Always produce gains for both parties
Produce gains for at least one party
Question 7
Wealth creating transactions are more likely to occur
with black markets
with private property rights
with strong contract enforcement
All of the above
Question 8
Which of these actions creates value?
Buying a struggling firm and selling off its assets for more than the purchase price.
A student increasing his decision-making ability with an MBA
A baseball slugger drawing paying fans into the ballpark.
All of the above
Question 9
A price ceiling
Will create a surplus.
Causes an increase in consumer and producer surplus.
Is a government-set maximum price.
Is an implicit tax on producers and an implicit subsidy to consumers.

Suppose that Gilberto, an economist from a consulting firm, and Juanita, another economist from a university in Florida, are both guests on a popular science podcast. The host of the podcast is facilitating their debate over budget deficits. The following dialogue represents a portion of the transcript of their discussion:
Juanita:
Most people recognize that the budget deficit has been rising considerably over the last century. We need to find the best course of action to remedy this situation.
Gilberto:
I believe that a cut in income tax rates would boost economic growth and raise tax revenue enough to reduce budget deficits.
Juanita:
I actually feel that raising the top income tax rate would reduce the budget deficit more effectively.
The disagreement between these economists is most likely due to .Despite their differences, with which proposition are two economists chosen at random most likely to agree?
Central banks should focus more on maintaining low unemployment than on maintaining low inflation.
Business managers can raise profit more easily by reducing costs than by raising revenue.
Employers should not be restricted from outsourcing work to foreign nations.