In Exercises 5–12, you are given a technology matrix A and an external demand vector D. Find the corresponding production vector X. [HinT: See Quick Example 1.]
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- 2. The Production Model. In the middle of the fourteenth century, an epidemic known as the Black Death killed about a quarter of Europe's population, about 34 million people. While this was an enormous tragedy, the macroeconomic consequences might surprise you: over the next century, wages are estimated to have been higher than before the epidemic. (Hint: Use the traditional production function Y = AKL to derive your answer). (a) Use the production model to explain why wages might have increased. (b) Can you attach a number to your explanation? in the model, by how much would wages rise if a quarter of the population died from disease?arrow_forwardThe Capital Asset Price Model (CAPM) is a financial model that attempts to predict the rate of return on a financial instrument, such as a common stock, in such a way that it is linearly related to the rate of return on the overal market. Specifically, RStockAiBo + BR Markets + e You are to study the relationship between the two variables and estimate the above model: R StockAi-rate of return on Stock A for month i, i = 1,2,---, 59. RMarket-market rate of return for month i, i=1,2,..., 59. B₁ represent's the stocks 'beta' value, or its systematic risk. It measure's the stocks volatility related to the market volatility. Bo represents the risk-free interest rate. The data in the .csv file contains the data on the rate of return of a large energy company which will be referred to as Acme Oil and Gas and the corresponding rate of return on the Toronto Composite Index (TSE) for 59 randomly selected months. Therefore Re, represents the monthly rate of return for a common share of Acme Oil…arrow_forward[For Q4 – Q5] Consider the following lifecycle model of consumption. Minjoon has 50 years of life remaining. He plans to work 30 more years from now and then retire. He earns $1,000 per year while he is working and has $200 per year pension income after retirement. He currently has $1,000 of savings. He wants equal consumption every year. The interest rate is zero. Q4. What will be Minjoon's wealth at the moment of retirement? Answer: a) $1,000. b) $3,000. c) $5,000. d) $10,000. Q5. Which of the following statements regarding this lifecycle model is (are) correct? I. If the income while working increases from $1,000 per year to $1,100 per year, Minjoon's optimal consumption before retirement will increase by $60 per year. II. Minjoon will decrease his consumption at the moment of retirement because he will have less income after his retirement. Answer: a) None of the above. b) I only. c) II only. d) I and II.arrow_forward
- Q1. The table provided gives data on indexes of output per hour (X) and real compensation per hour (Y) for the business and nonfarm business sectors of the U.S. economy for 1960–2005. The base year of the indexes is 1992 = 100 and the indexes are seasonally adjusted. a. Plot Y against X for the two sectors separately. b. What is the economic theory behind the relationship between the two variables? Does the scattergram support the theory? c. Estimate the OLS regression of Y on X. Note: on the table ( 1. Output refers to real gross domestic product in the sector. 2. Wages and salaries of employees plus employers’ contributions for social insurance and private benefit plans. 3. Hourly compensation divided by the consumer price index for all urban consumers for recent quarters.) Thank you!arrow_forwardAggregate Demand (AD) is defined as C + I + G + (X-M). X refers to Select one: Oa. Y factor O b. X factor O c. export expenditure O d. exchange Economic growth is shown in the AS-AD model as a Select one: O a tightward shift in the short run AS curve. O b. rightward shift in the AD curve. O c. rightward shift in the long run AS curve. O d. leftward shift in the short run AS curve.arrow_forwardThe following demand data is given for Glass Inc Company. They want to forecast the demands for all periods. Period 1 2 3 4 5 6 7 Demand 183 186 185 176 187 179 189 150 a. Using the moving average of 3 months, find the following forecast values. MA(3)4 = MA(3)6= MA(3)s= MA(3)8= b. Using the moving average of 4 months, find the following forecast values. MA(4)5 = MA(4)7= MA(4)6= MA(4)8= c. Using the moving average of 6 months, find the following forecast values. MA(6)7= MA(6)8=arrow_forward
- 42. Offshore Crude Oil Production: Mexico The following table shows daily offshore crude oil production by Pemex, Mexico’s national oil company, for 2008–2014 (t 5 0 rep-resents 2008):6Year t (year since 2008)0 1 2 3 4 5 6Offshore Crude Oil Production s1t2 (million barrels/day)2.25 2.01 1.94 1.90 1.90 1.90 1.85a. Find s102, s122, and s142. Interpret your answers.b. Find s1422s102. Interpret your answer. 43. Social Website Popularity: Twitter The following table shows the popularity of Twitter among social media sites as rated by StatCounter.com (t is the number of years since the start of 2008):7Year t (year since start of 2008)1 2 4 5Twitter Popularity p1t2 (%)7 6 6 7a. Represent p graphically, and then use your graph to estimate p14.52. Interpret your answer.b. One of the following models fits the data almost exactly. Which model is it?(A) p1t25 0.4t32 4t21 12.5t 1 15(B) p1t25 20.33t21 2t 2 8.7(C) p1t25 20.4t31 4t22 12.5t 1 15(D) p1t25 0.33t22 2t 1 8.7 44. Social Website…arrow_forwardAn economy has the following technology matrix T and external demand matrix D. Find the total output necessary to meet demand requirements. 0.06 0.03 T = 0.35 0.31 156 (837 D = 696.64 930.34, 372.9 1617.36 ( 121.53 522.93 54.33 479.19 210.33 1316.19arrow_forward1.2.4. Consider the spreading of a highly communicable disease on an isolated island with population size N. A portion of the population travels abroad and returns to the island infected with the disease. Formulate a dynamical system to approximate the change in the number of people in the population who have the disease.arrow_forward
- Suppose we know that 1.8 0.4 0.2 (I – A)–1 = 0.6 1.1 0.3 0.3 1.6 For each of the following, assume that the external demand for each of the products in the input-output system associate (I – A)–1 increases by 1 unit. By how many units should sector 1 increase production? Answer: By how many units should sector 2 increase production? Answer:arrow_forwardFind the production schedule for the technology matrix and demand vector given below: 0.1 0.1 3 A =| 0.2 D =| 9 0.1 0.1 8 X =arrow_forwardtion are given. (a) Sketch the first-quadrant portions of In Problems 1–4, a supply function and a demand func- market equilibrium point. (c) Algebraically determine the those functions on the same set of axes. (b) Label the market equilibrium point. (c) Algebraically determine the market equilibrium point. 1 q2 +10 1. Supply: p 4 Demand: p = 86 – 6q – 3g² 2. Supply: p = q² + 89 + 16 Demand: p = 216 - 29 3. Supply: p = 0.2q² + 0.4q + 1.8 Demand: p = 9 – 0.2q – 0.1q² 4. Supply: p q² + 8g + 22 %3D %3D %3D 1 198 4g 4 Demand: p %3D 5. If the supply function for a commodity is p = q? + 8q + 16 and the demand function is p = -3q2 + 6q + 436, find the equilibrium quantity and equilibrium price. 6. If the supply function for a commodity is p = q? + 8q + 20 and the demand function is p = 100 – 49 – q², find the equilibrium quantity and equilibrium price. 7. If the demand function for a commodity is given by the equation p? + 4q = 1600 and the supply function is given by the equation 300 – p² +…arrow_forward
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