Economics (7th Edition) (What's New in Economics)
7th Edition
ISBN: 9780134738321
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 2, Problem 2.2.15PA
To determine
Comparative advantage and working hours.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Ross is a senior citizen who consumes food and health care. When he retired in 2002, he consumed 90 meals and 3 medical checkups per month. Suppose in 2002 that the price of a meal was $10 and the price of a medical checkup was $73.
However, in 2012, the price of a meal is $11 and the price of a medical checkup is $285. As a result, Ross consumes 100 meals and 2 medical checkups per month.
Calculate a Laspeyres cost-of-living index for Ross using 100 as the base in 2002. In particular, the Laspeyres index for 2012 is
(Enter your response rounded to two decimal places.)
Roberto
is a senior citizen who consumes food and health care. When
he
retired in 2002,
he
consumed 90 meals and 3 medical checkups per month. Suppose in 2002 that the price of a meal was
$10
and the price of a medical checkup was
$64.
However, in 2012, the price of a meal is
$11
and the price of a medical checkup is
$278.
As a result,
Roberto
consumes 100 meals and 2 medical checkups per month.
Calculate a Laspeyres cost-of-living index for
Roberto
using 100 as the base in 2002. In particular, the Laspeyres index for 2012 is
nothing.
(Enter
your response rounded to two decimal
places.)
Suppose Congress enacts a tax reform law, and the average federal tax rate drops from 30% to 10%. Researchers investigate the
impact of the tax cut and find that the income subject to the tax increases from $600 billion to $700 billion. The theoretical explanation
is that workers have increased their work effort in response to the incentive of lower taxes.
On the following graph, use the green point (triangle symbol) to plot the point corresponding to the income of $600 billion. Then use the orange point
(square symbol) to plot the point corresponding to the income of $700 billion.
FEDERAL TAX REVENUE (Billions of dollars)
220
200
180
160
140
120
100 +
80
-
60 +
40 +
20
0
0
10
O True
20
O False
30
40
50 60 70 80
FEDERAL TAX RATE (Percent)
90
Laffer Curve
100 110
"A
Income $600
Income $700
True or False: The change in income is represented by a movement along the upward-sloping portion of the Laffer curve.
?
Chapter 2 Solutions
Economics (7th Edition) (What's New in Economics)
Ch. 2 - Prob. 1TCCh. 2 - Prob. 2TCCh. 2 - Prob. 2.1.1RQCh. 2 - Prob. 2.1.2RQCh. 2 - Prob. 2.1.3RQCh. 2 - Prob. 2.1.4PACh. 2 - Prob. 2.1.5PACh. 2 - Prob. 2.1.6PACh. 2 - Prob. 2.1.7PACh. 2 - Prob. 2.1.8PA
Ch. 2 - Prob. 2.1.9PACh. 2 - Prob. 2.1.10PACh. 2 - Prob. 2.1.11PACh. 2 - Prob. 2.1.12PACh. 2 - Prob. 2.1.13PACh. 2 - Prob. 2.1.14PACh. 2 - Prob. 2.2.1RQCh. 2 - Prob. 2.2.2RQCh. 2 - Prob. 2.2.3PACh. 2 - Prob. 2.2.4PACh. 2 - Prob. 2.2.5PACh. 2 - Prob. 2.2.6PACh. 2 - Prob. 2.2.7PACh. 2 - Prob. 2.2.8PACh. 2 - Prob. 2.2.9PACh. 2 - Prob. 2.2.10PACh. 2 - Prob. 2.2.11PACh. 2 - Prob. 2.2.12PACh. 2 - Prob. 2.2.13PACh. 2 - Prob. 2.2.14PACh. 2 - Prob. 2.2.15PACh. 2 - Prob. 2.3.1RQCh. 2 - Prob. 2.3.2RQCh. 2 - Prob. 2.3.3RQCh. 2 - Prob. 2.3.4RQCh. 2 - Prob. 2.3.5RQCh. 2 - Prob. 2.3.6RQCh. 2 - Prob. 2.3.7PACh. 2 - Prob. 2.3.8PACh. 2 - Prob. 2.3.9PACh. 2 - Prob. 2.3.10PACh. 2 - Prob. 2.3.11PACh. 2 - Prob. 2.3.12PACh. 2 - Prob. 2.3.13PACh. 2 - Prob. 2.3.14PACh. 2 - Prob. 2.3.15PACh. 2 - Prob. 2.3.16PA
Knowledge Booster
Similar questions
- Suppose Congress enacts a tax reform law, and the average federal tax rate drops from 30% to 20%. Researchers investigate the impact of the tax cut and find that the income subject to the tax increases from $600 billion to $650 billion. The theoretical explanation is that workers have increased their work effort in response to the incentive of lower taxes. On the following graph, use the green point (triangle symbol) to plot the point corresponding to the income of $600 billion. Then use the orange point (square symbol) to plot the point corresponding to the income of $650 billion. FEDERAL TAX REVENUE (Billions of dollars) 220 180 160 120 ༔ ༅ ༔ ༔ ༔ ༔ 80 60 86 40 20 + 0 + + + + 0 10 20 30 40 50 60 70 80 FEDERAL TAX RATE (Percent) Laffer Curve 90 90 100 110 The change in income is represented by a movement along the Income $600 Income $650 portion of the Laffer curve.arrow_forwardRandolph is taking three courses this semester: economics, statistics, and finance. He has decided to spend 20 hours per week studying (in addition to attending all his classes) and his objective is to maximize his average grade, which means maximizing the total of his grades in the three courses. The table shows Randolph's estimate of the relation between time spend studying and his grade for each course. Hours of study 4 5 6 7 8 9 10 Grade in: Economics Statistics 63 54 64 72 79 Multiple Choice 85 88 90 92 72 78 83 87 89 Finance 68 76 82 87 90 93 95 Based on the information in the table, how should Randolph allocate his time? 7 hours economics, 7 hours statistics, 6 hours finance 6 hours economics, 6 hours statistics, 8 hours financearrow_forwardSuppose that the residents of Greenland play golf incessantly. In fact, golf is the only thing that they spend their money on. They buy golf balls, clubs, and tees. In 2010, they bought 2,000 golf balls for $3.00 each, 200 clubs for $80.00 each, and 1,000 tees for $0.10 each. In 2011, they bought 2,100 golf balls for $3.50 each, 250 clubs for $90.00 each, and 1,500 tees for $0.15 each. Using 2010 as the base year, answer the following questions. a. What was the CPI for 2010? b. What was the CPI for 2011? c. What was the inflation rate in 2011? %arrow_forward
- On September 28, 2012. The Wall Street Journal reported that in the second quarter, the number of cellphone subscribers on contract plans rose just 0.7% from the year before, to 219 million, according to UBS AG. The number of prepaid customers grew about 11.7% to 71 million. How many prepaid customers were there in the second quarter of 2011?arrow_forwardWhat do we mean by “economic activity”?Economic Activity we mean the area of our social interactions in which people provide for their material needs and for those of their fellow human beings. It involves the production, the distribution, and the consumption of goods and services. #164. What does the Bible say about poverty and riches?Anyone who follows Jesus must never forget that first and foremost we are supposed to be ‘rich toward God’ (Lk.12:21). To become rich in material things is not a particularly Christian goal in life. And to be materially rich is not a sure sign of God’s special grace. Jesus teaches us to pray: ‘Give us this day our daily bread’ (Mt.6:11). With these words we ask the Father for all that we need for our earthly life. We do not strive for luxurious possessions but for the goods required for a happy life in moderate prosperity, the support of a family, works and charity, and participation in culture and education, as well as further development. #175. Is…arrow_forward10. Jack and Jill work together at an IT company. They are asked to write a new piece of code to fix a bug in some company software, and then they have to give a presentation about it to their colleagues. Between the two of them, Jill works faster. She could write the code in 6 hours, and prepare the presentation in 1 hour. Jack works slower. He would take 7 hours to write the code, and 2 hours to prepare the presentation. Now assume that they have to divide their tasks so that precisely one person works on the code and one person works on the presentation. Who should work on what? Use the concept of comparative advantage in your explanation.arrow_forward
- Ruth is a senior citizen who consumes food and health care. When she retired in 2002, she consumed 90 meals and 3 medical checkups per month. Suppose in 2002 that the price of a meal was $10 and the price of a medical checkup was $51. However, in 2012, the price of a meal is $11 and the price of a medical checkup is $285. As a result, Ruth consumes 100 meals and 2 medical checkups per month. Calculate a Laspeyres cost-of-living index for Ruth using 100 as the base in 2002. In particular, the Laspeyres index for 2012 is (Enter your response rounded to two decimal places.)arrow_forwardRuth is a senior citizen who consumes food and health care. When she retired in 2002, she consumed 90 meals and 3 medical checkups per month. Suppose in 2002 that the price of a meal was $10 and the price of a medical checkup was $69. However, in 2012, the price of a meal is $11 and the price of a medical checkup is $297. As a result, Ruth consumes 100 meals and 2 medical checkups per month. Calculate a Laspeyres cost-of-living index for Ruth using 100 as the base in 2002. In particular, the Laspeyres index for 2012 is 169.92 (Enter your response rounded to two decimal places.) The Laspeyres index suggests inflation has been 69.92 percent over the 10-year period from 2002 to 2012. (Enter your response rounded to two decimal places.) Next, calculate a Paasche cost-of-living index for Ruth using 100 as the base in 2002. In particular, the Paasche index for 2012 is (Enter your response rounded to two decimal places.)arrow_forwardAgain, please work with the following data set. It describes production of the only three goods made by Economy Zeta, along with their prices, for each of three years. Quantity Price of Quantity of Price of Quantity of Price of of Food Food Energy Energy Shelter Shelter 2018 800 $5 1000 $10 200 $100 2019 850 $6 1100 $12 240 $100 2020 850 $7 1200 $14 300 $100 Year Economists estimate that the average person in this economy consumes 12 units of food, 20 units of energy, and 2 units of shelter over the relevant period. 2018 is the base year. Using the GDP deflator, the inflation rate between 2018 and 2019 for this nation is ______________ percent. (Enter your answer "as a percent, but without the percentage sign." If you think the inflation rate is 99.99 percent, enter only 99.99 in the blank.)arrow_forward
- Homework Question 7: The Caviar Price Index Belugaland is an economy that produces only 3 goods: spear guns, caviar and fish fillets. The prices and quantities of goods in Belugaland are provided in the table below. In case you did not know already, caviar and fish fillets are consumer goods that are produced by killing fish. Spear guns are used by fishermen in Belugaland to shoot and kill fish. Assume there are no other goods or services produced in the economy. Also assume there are no imports or exports. Year Price Quantity Year Price Quantity $100 2020 2020 $5 2020 $50 20 Good Pounds of Caviar Fish Fillets Spear Guns 20 400 2022 $125 20 2022 $5 440 2022 $100 10 a) Calculate nominal GDP, real GDP, the GDP deflator and the PCE deflator for 2020 and 2022, using 2020 as the base year. b) Suppose that the CPI was first set up in 2020 (i.e. the reference year was 2020). What goods would be chosen for the CPI basket, and in what quantities? Briefly explain how you came about your answer.…arrow_forwardAt the beginning of the year, you have a saw worth $2,000 and a bunch of trees. says it will pay you $4,000 to not cut down your trees. Freaks4Environment Instead, you hire Lei to use your saw to cut down all of the trees. At the end of the year: you sell trees Lei cut down for $27,000; you pay Lei $15,000; and your saw is now worth $1,000. Based on this information, how much GDP has been created? Round to two decimal places. Do not enter the currency symbol, but enter the negative sign if appropriate. If your answer is -$1.125, enter -1.13. 27,000arrow_forwardSonya used to earn $25,000 a year selling real estate, but she now sells greeting cards. The return to entrepreneurship in the greeting cards industry is $14,000 a year. Over the year, Sonya bought $10,000 worth of cards from manufacturers and sold them for $58,000. Sonya rents a shop for $5,000 a year and spends $1,000 on utilities and office expenses. Sonya owns a cash register, which she bought for $2,000 with funds from her savings account. Her bank pays 3 percent a year on savings accounts. At the end of the year, Sonya was offered $1,600 for her cash register. Calculate Sonya’s explicit costs, implicit costs, and economic profit. Use the following information to work Problems 2 to 4. Yolanda runs a bullfrog farm. When she employs 1 person, she produces 1,000 bullfrogs a week. When she hires a second worker, her total product doubles. Her total product doubles again when she hires a third worker. When she hires a fourth worker, her total product increases but by only 1,000…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Microeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506893Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...EconomicsISBN:9781305506725Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Microeconomics: Private and Public Choice (MindTa...
Economics
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...
Economics
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning