compute the lifetime opportunity cost in terms of present value

10 QUESTION Study Guide

1. Research shows that after-school jobs are highly correlated with decreases in grade point averages. Those who work 1 to 10 hours earn a 3.0 GPA and those who work 14 hours or more earn on average a 2.6 GPA. Higher GPAs are, however, highly correlated with higher lifetime earnings. Assume that a student earns with present value of $8,000 per year for working part-time (8 hours a week) in college; also, assume that each additional hour of work increases that amount by of $1000, and that the return to a 0.1 increase in GPA increases one's lifetime earnings with a present value of $80,000. Use the following table to compute the lifetime opportunity cost in terms of present value for working 12 hours a week compare to working 8 hours a week.

Hours GPA
8 3.5
9 3.2
10 3
12 2.8
14 2.6

2. Use the following demand data to compute the market demand when the price is $45

P D1 D2 D3
37 20 4 8
47 15 2 7
57 9 1 6
67 5 1 4

3.Use the following supply data along with the demand data from exercise 2 to determine the market equilibrium price and market equilibrium demand.

P S1 S2 S3
37 1 4 13
47 2 8 14
57 9 13 18
67 9 17 20

4. Compute the price elasticity of demand from the following data

P Q
37 32
47 22

5. Use the following data to compute the inflation in 2008 relative to the price of 2007.

Year CPI GDP
2005 100 345
2006 126 349
2007 136 424
2008 146 526

6. Use the date given in question 5 to compute the percent change in real GDP from 2006 to 2007.

7. The Bureau of Labor Statistics reported that in May 2007 the total labor force was 152,762,000 of a possible 231,480,000 working-age adults. The total number of unemployed was 6,819,000. From this information, calculate the Unemployment rate.

8. The price level of a basket of goods in 2006 was $64. The price level of that same basket of goods in 2007 was $68. If 2006 is the base year, what was the Consumer Price Index in 2007?

9. Compute the equilibrium income if the aggregate expenditures function is AE =300 + .4 Y

10. Compute the autonomous and induced expenditure from the following data, where AE is the total expenditure and Y is the total income.

AE Y
39.4 32
40.75 35
43.9 42
49.75 55