MGEB06H3 Lecture 1: Solution_(Ch_3_Tut_1)(1)

102 views2 pages

orangecamel502

5 Oct 2015

School

UTSC

Department

Economics for Management Studies

Course

MGEB06H3

Professor

Iris

For unlimited access to Class Notes, a Class+ subscription is required.

Document Summary

This answer key aims at helping you to check your answer and you will not receive full credit if you do not show your work and/or provide explanation in your assignments and exams. Question 1: there will be an increase in labour supply in the low-skilled labour market: (w/p)low-skilled to (w/p)1 low-skillled, the labour supply in the high-skilled labour market remains unchanged: (w/p)high-skilled remains unchanged at (w/p)0 hihg-skilled. Ls0 high-skilled (w/p)0 high-skilled (w/p)0 low-skilled (w/p)1 low-skilled. Chapter 3 tutorial 1 answer key (cid:222) (cid:222) Question 2: the demand for (rental) capital . (r/p) to (r/p)1. Question 3: an influx of immigrants increase the supply of labour: (w/p) to (w/p)1 [point b of the rental market for capital diagram (below)] (r/p) to (r/p)1. [point e of the rental market for capital diagram (below)] In the very long-run:: when stock of capital : (w/p) back to (w/p)0. [point c of the labour market diagram]. (r/p) to (r/p)0.

Related Questions

please answer every question fully if you understand it 1 and 2 For each part of this question, please refer to and use one of the following concepts in your answer

. â¢ Intertemporal Substitution of Labour Supply

â¢ Total Factor Productivity

â¢ Aggregate Production Function

â¢ Policy Ineffectiveness Proposition

â¢ Lucas Critique

â¢ Stochastic vs Systematic

(1) Consider an economy where the following occurs:

â¢ In even-numbered years, the money supply does not change

â¢ In odd-numbered years, the money supply increases by 10%.

Perhaps surprisingly, output does not vary from year to year, it remains constant. Unemployment does not vary from year to year, either. As for inflation:

â¢ In even-numbered years, inflation is 0%

â¢ In odd-numbered years, inflation is 10%

Illustrate a graph of aggregate supply and aggregate demand to show how the observed behavior of output and unemployment occurs when the economy switches from an even-numbered year to an odd-numbered year. Explain how and why this outcome occurs.

(2) In the same economy as above, in the year t (an odd-numbered year), the money printing press catches fire, and there is no change in the money supply. However, no one notices this until the end of the year.

Which of the following is the most likely rate of inflation in year t: 0%, 10%, or something between the two?

Which of the following is the most likely value of output in year t: the usual level of output, more output than usual, or less output than usual?

Explain why this result differs from the outcome in an even-numbered year. If it does not, why not?

Your firm is one of 100 identical firms operating in the short run in a perfectly competitive market. Your total cost function (short run and long run) is C = 800 + 25 q + 0.5 q2, and your marginal cost function is MC = 25 + q. The (short run and long run) market demand curve is given by Q = 2,750 â 5P. a.Find the supply curve for your firm. Show work. Then, find the short-run market supply curve. Show work. b.Find equilibrium price, P*, and quantity, Q*, in the market in the short run.Show work. c.Find the lowest price at which your firm will not exit the market in the long run.Show work. Referring to your answer in part b, should your firm exit the market in the long run if P* in the market does not increase over time?Explain. d.If you choose not to exit, how many firms (including your own) do you expect to be in the market in the long run?Show work, and explain.

lavenderotter524

For each of the following decide whether the statement is true, false or uncertain and explain why. Your explanation determines your grade; you will receive no credit for an answer without an explanation.

1. Since positive externalities do not harm participants outside the market, there is no rationale for government intervention

2. An increase in demand in a perfectly competitive market will cause all firms to earn positive economic profits in long-run equilibrium.

3. Image Steve is a utility maximizing consumer who purchases music downloads and books. If the price of books decreases, Steve will consume more books and fewer music downloads.

4. As a result of technological improvements, the cost of extending life expectancy declined steadily in the US during the 20th century.

MGEB06H3 Lecture 1: Solution_(Ch_3_Tut_1)(1)

Document Summary

Get access

Related Documents

MGEB06H3 Lecture Notes - Lecture 1: Real Interest Rate, Price Level

MGEB06H3 Lecture Notes - Lecture 6: Price Floor, Working Poor, Efficiency Wage

MGEB06H3 Lecture Notes - Lecture 1: Efficiency Wage, Real Wages, Marginal Product

Related Questions