Microeconomics
21st Edition
ISBN: 9781259915727
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Question
Chapter 19, Problem 7DQ
To determine
The impact of increasing price on the extraction of resource.
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Students have asked these similar questions
Question 2
Suppose that the production function is Y = 10K5L5, the population growth rate is 15 percent
and the depreciation rate is 5 percent. What is the steady state level of k if the economy saves 30
percent?
O 400
O 225
100
O 1000
Question 3
Suppose that the production function is Y 10K SL5, the population growth rate is 15 percent
and the depreciation rate is 5 percent. What is the steady state level of y if the economy saves 30
percent?
250
350
150
O 450
2. Suppose that the table below shows an economy's relationship
between real output and the inputs needed to produce that output:
LO4
Input
Quantity
Real
GDP
150.0
$400
112.5
300
75.0
200
a. What is productivity in this economy?
b. What is the per-unit cost of production if the price of each input
unit is $2?
c. Assume that the input price increases from $2 to $3 with no
accompanying change in productivity. What is the new per-unit cost
of production? In what direction would the $1 increase in input price
push the economy's aggregate supply curve? What effect would this
shift of aggregate supply have on the price level and the level of real
output?
d. Suppose that the increase in input price does not occur but,
instead, that productivity increases by 100 percent. What would be
the new per-unit cost of production? What effect would this change
in per-unit production cost have on the economy's aggregate supply
curve? What effect would this shift of aggregate supply have on the
price…
Economics
• With the following points of one input x and one output y,
o Draw production possibility set satisfying free disposability
o Draw production possibility set satisfying free disposability and
convexity
o Draw production possibility set satisfying free disposability,
convexity, and constant returns to scale
Data
Input x
output y
Point A
3
Point B
2
7
Point C
3
Point D
4
6
Point E
8
LO
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- With current technology, suppose a firm is producing 400 loaves of banana bread daily. Also assume that the least-cost combination of resources in producing those loaves is 5 units of labor, 7 units of land, 2 units of capital, and 1 unit of entrepreneurial ability, selling at prices of $40, $60, $60, and $20, respectively. If the firm can sell these 400 loaves at $2 per unit, what is its total revenue? Its total cost? Its profit or loss? Will it continue to produce banana bread? If this firm’s situation is typical for the other makers of banana bread, will resources flow toward or away from this bakery good?arrow_forward2014 Tennis balls Golf balls Bottles of Gatorade Price $2 $4 $1 Quantity 100 100 200 2015 Price Quantity Tennis balls Golf balls Bottles of Gatorade $6 100 $2 $2 100 200arrow_forward7. There are large global inequalities in the amount of capital different countries have. Part of that is a result of choices by multinational businesses in where to build their factories. Should an American business like Ford build its next factory in the United States or in another country like Ghana? Many considerations go into this decision, but one of the most important ones is how much extra output the business would generate if it located an additional unit in the United States as opposed to India or another country. For these question assume that all countries have the same aggregate production function: Y = A x VK x VT but that countries vary in their capital stocks, labor forces, and TFP. Many people argue that all countries have access to the same technology. They argue that for the most part most ideas are on the internet which can be accessed from anywhere. So, for now, assume A = 1 in all countries. country K L K/L ratio U.S. 691 158.2 4.37 Ghana 4.21 13.2 0.319 Calculate…arrow_forward
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