refer to the figure below and assume that the combined consumer goods

We make the assumption that at any given point in time, there is a fixed amount of money in circulation. If José had unlimited income or if goods were free, then he could consume without limit. Assume that those who receive this income pay 30% in taxes, save 10% of after-tax income, spend 10% of total income on imports, and then spend the rest on domestically produced goods and services. Instructions: Enter your answers as whole numbers. What is consumer surplus, and how to calculate it ... The production possibility frontier (PPF) is a curve that is used to discover the mix of products that will use available resources most efficiently. With no tax, as shown in Figure 1, the demand curve is D1 and the supply curve is S. The equilibrium price is P1 and the equilibrium quantity is Q1. How valuable is e-commerce? | Stanford Institute for ... E) amount of each good that people want to buy. The graph is given below. Suppose income Y increases by $1.How much must the interest rate If the current interest rate is 2 percent, a. there is excess money supply. Unit 18 The nation and the world economy - CORE Question: Refer to the figure below and assume that the combined consumer goods+ capital goods values for points a,b, and care $20 billion, $40 billion, and $30 billion, respectively The Macroeconomy PPF PPF Consumer goods Instructions: Enter your answers as whole numbers a.lfthe economy moves from point a to point bover a 5-year period, what . The Macroeconomy 0 ppf PPF 5 Capital goods Consumer goods Instructions: Enter your answers as a whole number a. Figure 12.1 "Labor's Share of U.S. Income, 1960-2010" shows the share of total income earned annually by workers in the United States since 1960. Assume further that Hurricane Marilyn destroys much of the Jamaican sugar cane crop. Answer: C Diff: 2 Topic: Household Choices in Output Markets Skill: Analytic 7) Refer to Figure 6.1. D)complements. Refer to the figure below and assume that the combined consumer goods + capital goods values for points a, b, and c are $20 billion, $40 billion, and $30 billion respectively. the figure above. To calculate: Total Benefits: $1350. 3.6 Equilibrium and Market Surplus - Principles of ... $375 billion. a. Refer to the figure below and assume that the combined ... PDF Questions and Answers Analyze the effect of the hurricane on the markets for each of the three goods. Total benefits correspond to the blue area in Figure 3.6i. ____ 17. First, a flow capacity is assigned to each arc, and second, a per-unit cost is specified for shipping along each arc. Figure 7.12a shows that the firm's revenue is the area of the rectangle drawn below the demand curve. From Figure 7.2.1 it is clear that the only cost minimizing level of the variable input, labor, is at L*. 6-A A A A A A A A A A A A A A @ @ @ @ @ @ @ @ @ @ @ @ @ @ x 1 x 2 B(ˆp,w) B(p,w) pˆ 1 >p 1 . A)normal goods. Identify the effects of project phase and complexity on the choice of estimating method. Answer briefly whether and why each of the statements is either true or false: c. as the money market moves to equilibrium, people will buy more goods. Assume Zumbatanzerin has 60 workers. B) maximum combinations of goods and services that can be produced. For example, let us assume a = 50, b = 2.5, and P x = 10: Demand function is: D x = 50 - 2.5 (P x) Therefore, D x = 50 - 2.5 (10) or D x = 25 units. Which one of the following will cause a movement down along an economy's consumption schedule? If the actual graph of the relationship between consumption and income is below the 45-degree line, then the difference must represent the amount of income that is saved. a. Think of the simple of example of having $1,000 in circulation and the average price of the goods and services in the economy being $10. When Q is increased from 20 to 21, revenue changes for two reasons. Note that firms will cut their future orders in order to work off the unplanned inventory accumulation. For the following three questions, assume that Antarctica is the home country, and its currency is the Antarctica dollar (AAD), and Greenland is the foreign country and its currency is the crown (GRK). She is renting an apartment for $900 per month as shown in the diagram below (Assume each dollar spent on housing buys 1 unit of housing. B)substitutes. In the constant growth case, we assume the firm's dividend per share will grow at a constant rate for a definite period of time. Refer to the figure below and assume that the combined consumer goods+ capital goods value for point a ,b, c are $ 10 billion, $20 billion and $ 18 billion respectively. 1(b), we can use the tools of calculus to study it. José likes to collect T-shirts and movies. Let's assume that the blue line on the graph above represents today's production possibilities frontier. a. "Consumer sovereignty" means that: A. buyers can dictate the prices at which goods and services will be purchased. _TRUE__2.When actual investment is greater than planned investment, the economy is in danger of falling into a recession. In each case, identify which country has a comparative advantage in good X. a. We want to figure out the total amount of surplus for all consumers in the economy and derive the total consumer surplus. Labor accounts for roughly 71% of the income earned in the U.S. economy. The consumer surplus formula is based on an economic theory of marginal utility. Definition. As shown in the calculations in Figure 11.16 and Table 11.7 , out of the original $100 in government spending, $53 is left to spend on domestically . B) cyclical deficit. The nation and the world economy. Social marginal cost (SMB): The private marginal benefit to consumers plus any costs associated with the consumption of the good that are imposed on others Example: Using a car and emitting carbon contributing to global warming 6 41 Refer to Figure 34-1. C)that can be used in place of another good. . If the economy moves from point a to point b over a 10-year period, what must have been its Demand for Goods and Services. a. BCE b. ACF c. DEF d. ABED Figure 7-5. a. The result: a faster recovery in 2021 and 2022 and continued slightly faster growth over the forecast's remaining years. The theory explains that spending behavior varies with the preferences of individuals. CPI Home. And global growth recovers more quickly, helping to support the US economy (and to keep prices in check). In the short run, output and the interest rate decline to Y2 and r2 as the economy moves from point A to point B. Refer to the figure below and assume that the values for points a, b, and c (the combined value of consumer goods and capital goods) are $10 billion, $20 billion, and $18 billion, respectively. These characteristics are shown next to each arc. Figure 34-1 3. View Answer. All else being equal, an increase in income in Greenland leads to: f. The LM curve gives the combinations of income and the interest rate at which the supply and demand for real balances are equal, so that the money market is in equilibrium. The general form of the LM equation is M/P = L(r, Y). Economists use the term demand to refer to the amount of some good or service consumers are willing and able to purchase at each price. 9.1 Estimating Costs. It is known as the "Keynesian cross" because of the upward sloping AD and 45o lines. B) $740. We use a cost-of-living framework in making practical decisions about questions that arise in constructing the CPI. - [Instructor] The CPI, or Consumer Price Index, is used to measure the cost of a typical basket of goods. B. advertising is ineffective because consumers already know what they want. ____ 34. If today's level of production is at the purple point, the level of investment in capital goods (i.e. (10 points) "According to the Heckscher-Ohlin theory, countries should engage in a lot of intra-industry trade." 9. The Macroeconomy PPF2 PPF, b a Consumer goods Instructions: Enter your answers as a whole number. In the longer run, prices begin to decline because output is below its long-run equilibrium level, and the LM curve then shifts to the right 6 units of consumer goods. The first row shows income and, after taxes and personal savings are subtracted, it shows that, in 2015, the average U.S. household spent $48,109 on consumption. . f. The LM curve gives the combinations of income and the interest rate at which the supply and demand for real balances are equal, so that the money market is in equilibrium. the left, as shown in the figure. Answers to Assignment 4 Chapter 11: Problem 1: mpc= DC/DDI = change in consumption spending divided by the change in real disposable income.. C - consumption spending DI - real disposable income For this problemm, note in the table that every change in disposable income of 10 leads to a change Instructions: Enter your answers as whole numbers. A cost-of-living index is a conceptual measurement goal, however, and not a straightforward alternative . The typical household in the nation of Jacksonia buys four loaves of bread, three pounds of cream cheese, and eight books each week. Country B has comparative advantage in good X. Problem 26-4 Refer to the figure below and assume that the combined consumer goods + capital goods values for points a, b, and c are $10 billion, $20 billion, and $18 billion respectively. 45) Using the above figure, if full employment occurs at $13 trillion, but the economy is actually producing $15 trillion, then there is a A) structural deficit. View Answer. 1) In the supply function Q s = -10 + 10P, Q s represents quantity of good Z supplied per . 45) 46) In the above figure, suppose the economy is at point A. If the economy moves from point a to point b over a 10-year period, what must have been its annual rate of economic growth? b. people will sell more bonds, which drives interest rates up. An extra car is sold at the new price, but since the new price is lower when Q = 21, there is also a loss of $80 on each of the other 20 cars. Hence, here the revenue collected equals P 1 P 2 XQ 3 Q 4, the area (r) in the figure. B 2) When drawing a production possibilities frontier, which of the following is held constant? The general form of the LM equation is M/P = L(r, Y). The country's balance of payments on the current account is: A. C) $32 million. Knowing that foreign has a comparative advantage at cheese production, we can use the table to list all specific values. Production totals 350 pairs of skis per month and zero snowboards. A) an increase in stock prices C) an increase in consumer indebtedness The consumer, firm and government demands can be represented graphically. The combined production possibilities curve for the firm's three plants is shown in Figure 2.4 "The Combined Production Possibilities Curve for Alpine Sports". The table is very logical - if you spend all your time catching crabs, you will have no pineapples. 2. When the price rises from P1 to P2, which area represents the increase in producer surplus to existing producers? 7% ). If the values of a and b are known, the demand for a commodity at any given price can be computed using the equation given above. The combined effect of operating leverage and financial leverage is the degree of operating leverage plus the degree of financial leverage. a. D) different combinations of two goods among which the consumer is indifferent. All of the following characteristics apply to monopolistic competition EXCEPT A) a large number of firms compete. . At higher price levels, the money in circulation can purchase fewer items. In Figure 6.1a, the number of T-shirts José will buy is on the horizontal axis, while the number of movies he will buy José is on the vertical axis. Answer: C 28. Choose the correct answer. 16) Based on Figure 3.1, it can be inferred that: . In this case, the country's balance of payments on goods and services is: A. B. Labor generates considerably more income in the economy than all other factors of production combined. consuming an additional unit of a good by the consumer. $355 . D)of lower quality than another good. Unit 18 The nation and the world economy. Demand for Goods and Services. a. Key points. C Economists normally assume that the goal of a firm is to Answer: D 21. C)inferior goods. Each table below shows the amounts of labor required to produce one unit of each of two goods, X and Y, in two countries, A and B. Expand all. D) zero. The consumer's problem is to choose theelement x∈B(p,w)that is most preferred or, equivalently, that has the greatest utility. 20) 21) People buy more of good 1 when the price of good 2 rises. Although several graphical presentations are possible, Figure 1 below is the most common. increase is the marginal revenue. guns) is more than enough to overcome depreciation, and the level of capital available in the future will be greater than the level . We begin at point A, with all three plants producing only skis. D) $100. Refer to the table which provides the information for a country's balance of payment. Figure 2.2a displays a table showing several different combinations of goods that can be harvested in a given week. The prices of these goods in years 2015, 2016, and 2017 are given in the table below. All of the following characteristics apply to monopolistic competition EXCEPT A) a large number of firms compete. Definition. C. buyers control the quality of goods and services through regulatory agencies. Tomʹs monthly income is A) $20. D) zero. Figure 3.1. Information on the consumption choices of Americans is available from the Consumer Expenditure Survey carried out by the U.S. Bureau of Labor Statistics.Table 1 shows spending patterns for the average U.S. household. This represents that part of the loss in consumer surplus which is transferred to the government in the form of money, the revenue effect a tariff. Refer to the figure below and assume that the values for points a, b, and c (the combined value of consumer goods and capital goods) are $10 billion, $20 billion, and $16 billion, respectively. Thus, the flow on arc 2-4 must be between 0 and 4 units, and each unit of flow b can also be denoted by change in D x for change in P x. An easy way to visualize is shown to the right. 10. If there was no membership fee the area below the demand curve and above the price would be consumer surplus, however, by charging a membership fee equal to the area of consumer surplus (recall the area of a triangle is .5*base*height or .5*25*60 = $750), the golf club is able to convert the consumer surplus into additional revenue for the firm. Visit Audio Recordings for the audio version of this section. Assume Tom is on budget constraint AC and the price of a hamburger is $4.00. Tariff revenues always equal the amount of duty times the quantity of goods imported under it. B) $16 million. We can again refer to the initial table we created in order to draw the relative supply curve. D) $18. 3. C) $60. Make This area is made up of a rectangle with dimensions 300 x $3 and a triangle with base 300 and height of $3. If Prime Pharmaceuticals could practice perfect price discrimination, then consumer surplus would equal A) $64 million. Refer to the figure below and assume that the combined consumer goods + capital goods values for points a, b, and c are $10 billion, $20 billion, and $18 billion, respectively. Demand is based on needs and wants—a consumer may be able to differentiate between a need and a want, but from an economist's perspective they are the same thing. B) $16 million. Country A has comparative advantage in good X. b. In Figure 9-1 we see a 45-degree line which represents all points where consumer spending is equal to disposable income. Sugar cane is a principal ingredient in rum, but it is not an ingredient in whiskey. It is important to know that the Refer to the above data. 2) D) structural surplus. C) resources the economy possess, but not its level of technology. This area is made up of a rectangle with dimensions 300 x $3 and a triangle with base 300 and height of $3. B) $60. What is the value of the MPC? C) $80. How the integration of national economies into a global system of trade and investment provides opportunities for mutual gains and conflicts over the distribution of the gains. Consumer surplus is an economic measurement to calculate the benefit (i.e., surplus) of what consumers are willing to pay for a good or service versus its market price. Academia.edu is a platform for academics to share research papers. 1 . If consumer spending increased by $25 billion, resulting as an equilibrium output increasing by $75 billion. If the economy moves from point a to point b over a 10-year period, what must have been its annual rate of economic growth? Economists use the term demand to refer to the amount of some good or service consumers are willing and able to purchase at each price. Alvin's preferences for good X and good Y are shown in the diagram below. Figure 4: Relative World Supply Pc Pw a∗ c a∗ w = 1 ac aw = 5 2 Q c +Q∗ Q w+Q∗ RS Q∗ Qw =100 . F 14. C) consumption possibilities that a consumer faces at different prices and income. d. All of the above are correct. A movement along the supply curve caused by a change in the price of the good. If we restrict ourselves to just two goods, the budget set has a nice graphical representation, as is shown in Figure 1. Figure: The change in TR is measured by the slope of the TR line, 2 (= $2/1 unit). Describe methods of estimating costs. Globalization is a term referring to the integration of the world's markets in . In this mini economy we have 5 consumers, and we line them up left to right by their willingness to pay (consumer 1 is willing to pay more than consumer 2, etc. Step one: draw a market model (a supply curve and a demand curve) representing the situation before the economic event took place. b. LEARNING OBJECTIVES. Chapter 9 -- The Government and Fiscal Policy __TRUE_1.Disposable personal income is personal income minus taxes plus transfer payments. Figure 8.1 exhibits several additional characteristics of network flow problems. Product Price Quantity Demanded Total Revenue Marginal Revenue $2 0 $0 - 2 1 2 $2 2 2 4 2 2 3 6 2 24 8 2 5 10 2 Q 3 b To calculate: Total Benefits: $1350. and the consumer is consuming both goods, the consumer is not . Questions 3-26 through 3-30 refer to the following problem . Draw its production possibility curve, and illustrate on it pre-trade and post trade situations of production and consumption, using indifference curves. A) goods and services that people want. Please place your name, TA name and section number on top of the homework (legibly). If Prime Pharmaceuticals could practice perfect price discrimination, then consumer surplus would equal A) $64 million. The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. 28. To figure out how we can most effectively reduce emissions and what emissions can and can't be eliminated with current technologies, we need to first understand where our . a. The equilibrium of supply and demand in each market determines the price and quantity of that item. Suppose income Y increases by $1.How much must the interest rate The CPI frequently is called a cost-of-living index, but it differs in important ways from a complete cost-of-living measure. Economics questions and answers. 2. CostFunctions If we assume that a cost function, C(x), has a smooth graph as in Fig. Indexes are available for the U.S. and various geographic areas. 19) 20) A substitute is a good A)of higher quality than another good. Notice that you can produce either all crabs, all pineapples, or a mix of the two. 1 Economics 101 Fall 2016 Answers to Homework #2 Due Thursday, October 13, 2016 Directions: The homework will be collected in a box before the lecture. the figure above. Total benefits correspond to the blue area in Figure 3.6i. An expected increase in the inflation rate to Instructions: Enter your answers as whole numbers. Consumer spending, particularly for durable goods, remains strong. D. $355 billion. Refer to the figure below and assume that the combined consumer goods + capital goods values for points a, b, and c are $20 billion, $40 billion, and $32 billion respectively. Explain using graphs. C) $32 million. 1. Consider the situation of José, as shown in Figure 6.1a. All of the following statements refer to the standard Heckscher-Ohlin Model, with 2 factors (labor and land), 2 goods, and 2 countries. Academia.edu is a platform for academics to share research papers. In Figure 3.21 "The Circular Flow of Economic Activity", markets for three goods and services that households want—blue jeans, haircuts, and apartments—create demands by firms for textile workers, barbers, and apartment buildings. Refer to Figure 7-4. Assume that Pete's marginal propensity to consume equals 0.75, and that in 2012 Pete spent $44,000 from his disposable income of $50,000. A price floor leads to a surplus, if the floor is binding, because suppliers produce more goods than are demanded unless the price is allowed to fall below the floor. Which of the following is a microeconomic statement. A typical cost function is analyzed in Example 1. y x Cost 1 Production level (b) 510 y = C(x) Cost 1 Production level (a) 510 y x y = C(x) Figure 1 A cost function. Refer to the figure below and assume that the values for points a, b, and c (the combined value of consumer goods and capital goods) are $20 billion, $40 billion, and $36 billion, respectively. Assume that the consumer depicted in the figure above has an income of $40, the price of a bag of marshmallows is $2, and the price of a bag of chocolate chips is $2.The optimizing consumer will choose to purchase which bundle of marshmallows and chocolate chips? With our total benefits (blue) and our total costs (red), we can easily determine our total market surplus is the green area in Figure 3.6j below. The world emits around 50 billion tonnes of greenhouse gases each year [measured in carbon dioxide equivalents (CO 2 eq)]. Term. The perice of personal computers declined last year. 27. D) limits to people's wants. Refer to Figure 34-1. Refer to the above tables. There are, as always in that model, constant returns to scale. Figure 7-4 ____ 16. 25) 26) Moving along an indifference curve the A) consumer prefers some of the consumption points to others. B)that is not used in place of another good. Demand is based on needs and wants—a consumer may be able to differentiate between a need and a want, but from an economist's perspective they are the same thing. K=3 ($75 billion/$25 billion), 3=1/MPS, MPS=.33, MPC=.67. With our total benefits (blue) and our total costs (red), we can easily determine our total market surplus is the green area in Figure 3.6j below. Figure 6.1 6) Refer to Figure 6.1. Answer: D 21. These goods are A . ANS: B PTS: 1 DIF: 2 REF: 34-1 4. Assume Tom is on budget constraint AC and the price of a hot dog is $2.00. C) cyclical surplus. There is a four-step process that allows us to predict how an event will affect the equilibrium price and quantity using the supply and demand framework. Use Table 41-2. Initially, the LM curve is not affected. To see this, note that any level of labor below L* would yield a lower level of output, and any level of labor above L* would yield the desired level of output but would be more costly than L* because each additional unit of labor employed must be paid for. C. $4,045 billion. If south cantina is producing a production alternative D, the opportunity cost of the third unit of capital goods will be. Assume you choose to only catch crabs. Refer to Figure 7-5. 27. The convenience gain per transaction comes to $36 dollars. E. -$425 billion. -$375 billion. At an $800 level of disposable income, the level of saving is: A) $180. To monetize miles, we assume that each mile costs $0.80 in time costs and $0.79 in direct costs, for a total of $1.59 for each one-way mile and $3.18 for each round-trip mile between the consumer and the store. Describe the method of combining cost estimates with a schedule to create a budget. 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