Macroeconomics
10th Edition
ISBN: 9780134896441
Author: ABEL, Andrew B., BERNANKE, Ben, CROUSHORE, Dean Darrell
Publisher: PEARSON
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Chapter 2, Problem 3NP
(a)
To determine
The contributions made by the three approaches of production, income and expenditure to the
(b)
To determine
The contributions made by the three approaches of production, income and expenditure to the gross domestic product given that an additional
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A young chef is considering opening his own sushi bar. To do so, he would have to quit his current job, which pays $30,000 a year, and take over a restaurant space that he owns and currently rents to his brother for $24,000 a year. His expenses at the sushi bar would be $50,000 for food and $2,000 for gas and electricity.
Suppose the sushi bar’s revenue from the first year is $120,000. What is the chef’s economics profit?
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Imagine Tom's annual salary as an assistant store manager is $30,000, he owns a building that rents for $10,000 yearly, and his financial assets generate $1,000 per year in interest. One day, after deciding to be his own boss, he quits his job, evicts his tenants, and uses his financial assets to establish a bicycle repair shop. To run the business, he outlays $15,000 in cash to cover all the costs involved with running the business, and earns revenues of $50,000. Which of the following statements is true?
Tom earns an accounting profit of $35,000.
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Tom experiences an economic loss of $6000.
Assume that a farmer rents a 20-acre farm in the White Creek Valley. During the current year, the farmer produces 100,000 bushels of wheat that he sells to a miller for $300,000 using various farming equipment. The farmer had to borrow from the bank to buy the farming equipment and pays $50,000 interest. Finally, the labor costs are $200,000 and the rent he pays to the owner of the land is $30,000.
The miller produces and sells to “Bang Bakery” in Newark 1,000 lbs of flour worth $600,000. The flour is produced in a $100,000 mill in Hockessin; no rent is paid, the wage bill is $180,000 and interest payments are $70,000. Finally, “Bang Bakery” makes and sells bread to the Newark consumers for $1,000,000. The rent for their factory and their stores is $100,000 – their interest payments are $50,000 - their wage bill, $300,000. It was not a good year for “Bang Bakery.”
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Chapter 2 Solutions
Macroeconomics
Ch. 2 - Prob. 1RQCh. 2 - Prob. 2RQCh. 2 - Prob. 3RQCh. 2 - Prob. 4RQCh. 2 - Prob. 5RQCh. 2 - Prob. 6RQCh. 2 - Prob. 7RQCh. 2 - Prob. 8RQCh. 2 - Prob. 9RQCh. 2 - Prob. 10RQ
Ch. 2 - Prob. 1NPCh. 2 - Prob. 2NPCh. 2 - Prob. 3NPCh. 2 - Prob. 4NPCh. 2 - Prob. 5NPCh. 2 - Prob. 6NPCh. 2 - Prob. 7NPCh. 2 - Prob. 8NPCh. 2 - Prob. 9NPCh. 2 - Prob. 1APCh. 2 - Prob. 2APCh. 2 - Prob. 3APCh. 2 - Prob. 1WWMDCh. 2 - Prob. 2WWMDCh. 2 - Prob. 3WWMDCh. 2 - Prob. 4WWMDCh. 2 - Prob. 5WWMDCh. 2 - Prob. 6WWMD
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