See attached file for full problem description.
2. The following outline provides a complete description of all economic activity in Trivialand for 2004. Draw up versions of Tables 3 and 4 for Trivialand showing GDP computed in two different ways.
I. There are thousands of farmers but only two big business firms in Trivialand: Specific Motors(an auto company) and Super Duper (a chain of food markets). There s no government and no depreciation.
II. Specific Motors produced 1,000 small cars, which it sold at $6,000 each, and 100 trucks, which it sold at $8000 each. Consumers bought 800 of the cars, and the remaining 200 cars were exported to the United States. Super Duper bought all the trucks.
III. Sales at Super Duper markets amounted to $14 million, all of it sold to consumers.
IV. All farmers in Trivialand are self-employed and sell all of their wares to Super Duper.
V. The costs incurred by all of Trivialand's businesses were as follows:
Specific Motors Super Duper Farmers
Wages $3,800,000 $4,500,000 $0
Interest 100,000 200,000 700,000
Rent 200,000 1,000,000 2,000,000
Purchases 7,000,000 0
Of food 0
GDP calculation based on values for wages, raw materials, rent and interest for three fictitious companies.
GDP growth rate, CPI change, demand data, graph fixed costs, demand, resources
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
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
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