# GDP growth rate

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CH 8/ Q2. Suppose an economy's real GDP is $30,000

in year 1 and $31,200 in year 2. What is the growth rate of

its real GDP? Assume that population is 100 in year 1 and

102 in year 2. What is the growth rate of GDP per capita?

CH 8/Q11. If the CPI was 110 last year and is 121 this

year, what is this year's rate of inflation? What is the "rule

of 70"? How long would it take for the price level to double

if inflation persisted at (a) 2, (b) 5, and (c) 10 percent per

year?

CH20/ Q2. Graph the accompanying demand data, and

then use the midpoint formula for Ed to determine price

elasticity of demand for each of the four possible $1 price

changes. What can you conclude about the relationship between

the slope of a curve and its elasticity? Explain in a

nontechnical way why demand is elastic in the northwest

segment of the demand curve and inelastic in the southeast

segment.

Product Quantity

Price Demanded

$5 1

4 2

3 3

2 4

1 5

CH22/ Q7. A firm has fixed costs of $60 and variable

costs as indicated in the table on the following page.

Complete the table and check your calculations by referring

to question 4 at the end of Chapter 23.

a. Graph total fixed cost, total variable cost, and total cost.

Explain how the law of diminishing returns influences

the shapes of the variable-cost and total-cost curves.

b. Graph AFC, AVC, ATC, and MC. Explain the derivation

and shape of each of these four curves and their

relationships to one another. Specifically, explain in

nontechnical terms why the MC curve intersects both

the AVC and the ATC curves at their minimum points.

c. Explain how the location of each curve graphed in

question 7b would be altered if (1) total fixed cost had

been $100 rather than $60 and (2) total variable cost

had been $10 less at each level of output.

CH3/ Q6. "In the corn market, demand often exceeds supply and supply

sometimes exceeds demand." "The price of corn rises

and falls in response to changes in supply and demand." In

which of these two statements are the terms "supply" and

"demand" used correctly? Explain.

CH2/ Q2. What are economic resources? What categories do economists

use to classify them? Why are resources also called

factors of production? Explain: "If resources were unlimited

and freely available, there would be no subject called

economics."

#### Solution Summary

The response addresses the queries posted in 1526 words with references.