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Both the European Union and the United States produce cars and television shows. Assume the labor costs (in worker hours) required for the production of cars and programs is as follows:
Assume each region has 240,000 worker hours to divide between producing cars and television shows. Initially, assume workers are divided equally between producing cars and television shows.
(a) What are the initial levels of production of cars and TV shows in each region? What is total production in the two regions?
(b) Draw the production possibilities curves for the two regions.
(c) Which region has an absolute advantage in producing cars? Which region has an absolute advantage in producing television shows?
(d) Which region has a comparative advantage in producing cars? Which region has a comparative advantage in producing television shows?
(e) Starting with the initial levels of production, demonstrate how comparative advantage can be exploited to raise joint production of cars by 10 while leaving television show output unchanged.
What is the value added at each stage of production? Using the value-added approach, what is GDP? c. What are the total wages and profits earned? Using the income approach, what is GDP?
A successful engineer wants to fund an endowment for a university which will pay $10,000, $15,000, $20,000, and $25,000 for the 1st, 2nd, 3rd, and 4th quarters respectively, each year, forever. For an interest rate of 8% compounded quarterly,
The equation for a demand curve has been estimated to be: Q=100-10P+0.5Y Where Q is quantity, P is price and Y is income. Assume that P=7 and Y=50. a.) At a price 7, what is the price elasticity b.) At an income level of 50, what is the income elasti..
If the government imposed a minimum wage of w=70, what would be the resulting quantity of labor employed, the wage, and the welfare loss. Also, calculate the change in welfare compared to the free market outcome (i.e., in the absence of minimum w..
Suppose that each firm that tries to produce autos must go through the shakedown period of high costs on its own. Under what circumstances would the existence of the initial high costs justify infant industry protection?
Firm ‘A' can make either 500 flashlights or 2000 batteries. Firm ‘B' can make either 650 flashlights or 1500 batteries. a) Who has comparative advantage in each good b) How would they both make themselves better off
Amy has $12 a week to go spend on coffee and pop. The Price of coffee is $2 a cup, and pop is $1 a can. Draw a graph of Amy's budget line. Can Amy buy 7 cans of pop and 2 cups of coffee a week? Can she buy 7 cups of coffee and 2 cans of pop a week..
determine the best monthly production capacity for the next 12 months, not the number of workers required).
Analyze the message delivered by each of your visual media items. Foreachitem, respond to the following questions in complete sentences. Cite evidence from the resource and the lesson to justify your responses.
Suppose that the production function is Y= 9K^0.5 N^0.5 With this production function, the marginal product of labor is MPN= 4.5K^0.5 N^-0.5. The capital stock is K= 25. The labor supply curve is NS= 100(1-t)w]^2, where w is the real wage rate, t ..
The company recently bid on a Gulf-front causeway improvement in Biloxi, Mississippi.Nash Bridges has incurred bid development and job cost-out expenses of $25,000 prior to submission of the bid.
A profit maximizing monopolist hires workers in a perfectly competitive labor market. Employing the last worker increased the firm's total weekly output from 110 units to 111 units and caused the firm's weekly revenues to rise.
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