Suppose that the economy's long-run output level is produced according to the following production function: and that A = 5, K= 400 and L = 100. Y = AK ¹/2 L¹/2 d) Suppose that M = 2000 and that k = 2. What is the price level P at which the economy is in long-run- equilibrium? Plot such an equilibrium on a diagram with P on the vertical axis and Y on the horizontal axis, by distinguishing between the short-run and the long-run equilibrium. f) Suppose that A increases. Explain the reasons that might lead to an increase in A and show graphically the short and long-run impact of such a change. Make sure to clearly explain your reasoning.
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- Suppose the economy of Apple Republic is represented by the following equations: Z = C +|+ G C = 500 + .5YD T= 600 |= 300 YD = Y - T G = 2000 (Enter number only into the boxes) a. Given the above variables, calculate the equilibrium level of output (Y) disposable income (Yp) and consumption (C) Hint: First specify (using the above numbers) the demand equation (Z) for this economy. Second, using the equilibrium condition, equate this expression with Y. Once you have done this, solve for the equilibrium level of output (Y). Third, once you get Y, you can T from Y to get Yp. Finally, once you get Yp, you substitute it into the consumption equation to get consumption (C). b. Now, assume that government spending decreases from 2000 to 1900. What is the new equilibrium level of output (Y) ? What is the multiplier for this economy c. Now, assume that G is still at 2000, but taxes increase from 600 to 700. What is the new equilibrium level of output (Y) ? What is the multiplier for this…true or false - explain in short be supported with an economic model. If the demand for and supply of a product both increases, the equilibrium quantity of the product must also increase. If the demand for a product decreases and the supply of the product increases, the equilibrium price of the product may increase or decrease, depending on whether supply or demand has shifted more. Assume that there is a fixed supply in the market. A higher price will result from a change in demand brought about by a rise in income.Suppose that M = 2000 and that k = 2. What is the price level P at which the economy is in long-run- equilibrium? Plot such an equilibrium on a diagram with P on the vertical axis and Y on the horizontal axis, by distinguishing between the short-run and the long-run equilibrium.
- Consider the economy described by the following equations: C = 1,600 + 0.9 (Y – T) I p = 800 G = 1,600 NX = 200 T = 1,600 Y* = 29,000 a. Complete the table shown below to find short-run equilibrium output. Consider possible values for short-run equilibrium output as they are given in the table below.Instructions: If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. OutputY Planned aggregate expenditure (PAE) Y – PAE Y = PAE? 27,200 (Click to select) Yes No 27,400 (Click to select) No Yes 27,600 (Click to select) No Yes 27,800 (Click to select) No Yes 28,000 (Click to select) No Yes b. Short-run level of equilibrium output: c. What is the output gap for this economy? Instructions: If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. The actual unemployment rate should…explain how equilibrium is optained hereStep3, part b of the question: it asks for equilibrium level of C. If formula for C is C= 1000+ 0.8Yd, then since at equilibrium Y=7000 shouldn't C be equal to C= 1000 + 0.8(7000-350) = 6320? If so, than the last part of the question regarding S should be 7000-6320= 680 Please let me know where I am wrong
- Q3 7. Suppose the United States economy is represented by the following equations: C = 300 + SYDT= 4001 = 200 G = 1000 Z=C+1+G Yp = Y -T a. Given the above variables, calculate the equilibrium le vel of output. Hint: Pirst specify (using the above numbers) the demand cquation (Z) for this economny. Šecond, using the equilibrium condition, equate this expression with Y. Once you have done this, solve for the equilibrium level of output. Using the ZZ-Y grapth (i.e., a graph that includes the ZZ line and 45-degree line with Z on ihe vertical axis, and Y on the horizontal axis), illustrate the equilibrium level of output for this economy. b. Now, assunic that consumer confidence increases cuusing an increase in autonomous consumption (co) fron 300 to 400. What is the new equilibrium tevel of output? How much does income change as a result of this event? What is the nultiplier for this economy? c. Graphically illustrate (in the above graph) the effects of this change in autonomous…Consider the following solutions in the model for quantity demanded D,, and quantity supplied P: P₁ = (Do + Po)+=(Po-Do)(1-2k)", 1 1 D₁ = (Do + Po)+ (Do-Po)(1-2k)", where P, is the level production after n time intervals, D, is the quantity demanded by the consumer and k is a constant. 1. Choose any values for the initial quantity demanded D, and the initial quantity supplied P to plot the graphs for D,, vs n and P₁, vs n when k = 0.3. Indicate the values for D, and Po you used. 2. Using the graphs you plotted, describe the behaviour of the quantity demanded D.2. Suppose D0 and S0 are the initial demand and supply curves for tablets. P0* and Q0* are respectively the initial equilibrium price and initial equilibrium quantity in the market for tablets. Rapid economic growth over the last three years has substantially increased the disposable income of most households. Using comparative statics, analyze how the equilibrium price and equilibrium quantity in the market for tablets will change as a result of the increase in disposable income. Be sure to illustrate your answer with graph.
- - Suppose that we need to develop a model to help us to allocate a resource between two time periods: Period 1 and Period 2. Demand can be characterized in both periods as: P = 20-2Q. In both periods the marginal cost of extracting the resource is constant at $4 per unit. The total quantity of the resource that is available to allocate between the two periods is 18 units (in other words, Q1 + Q2 <= 18). Assume that the discount rate is 5%. What is the marginal user cost? a) 0; b) 0.76; c) -2; d) 1.9 SharkWould the assumption that goods are perfect substitutes be valid in a study of intertemporal food purchases? Explain with graphic.Beer production in Mexico rose 4.7 percent in 2021, registering 118.7 million hectoliters more. Although the installed capacity of the brewing industry allowed for its gradual recovery, particularly towards the second half, this increase is explained by the fact that, by the end of 2021, a greater number of massive events were held that allowed the demand for beer to increase. The increase in beer production in Mexico is explained by a shift in the demand curve to the right, this movement causes a decrease in the price of beer, which helped reactivate the market. (T/F) _______