Macro Econ Discussion Questions - Assignment Example

Macroeconomics al Affiliation) Answers to Page 67 Questions Question 2 b) Lower tuition fee. Question 3 If the government had introduced price-gouging laws for consumers, the shrimp prices would not have risen and consumption would have remained the same in the wake of the BP Oil spill.Question 7Both individuals who can afford and those that cannot afford the market prices share the available (qa) organs. This is fairer than the market distribution system where individuals who can afford the market prices only can access the organs.

Answers to Page 68 QuestionsProblem 4If the government set a price ceiling of $2, the total market supply would be 12 gallons per day. However, at this price, the total market demand is 15 gallons per day. There would be a market shortage of 15-12 = 3 gallons per day.Problem 5c) PriceProblem 8a) qa is supplied at zero pricesb) qe would be supplied at positive pricesAnswers to Page 87 QuestionsQuestion 1Taxpayers should subsidize public colleges and universities as they benefit the society through increased research, innovations, and human resource development.

Question 4The fourth of July fireworks might be considered a public good since no one can be excluded from enjoying the fireworks. Airport security is not a public good since it is exclusionary and only individuals within the airport premises enjoy the security.Question 6If smoking generates external costs, it should not be outlawed but a sales tax should be introduced to cater for the external costs. Similarly, in the case of cars pollution, toll taxes on roads or unit taxes on fuel can be introduced to cover for the social costs of the pollution.

Question 7Social security benefits cannot be provided optimally in the private sector hence the need for government intervention to provide the benefits to individuals.Question 11The taxes of local governments hit the poor hardest.Answers to page 89 QuestionsProblem 6a)IncomeConsumptionSales Tax 10%% of Income paid in Taxes1000011000110011%2000020000200010%400003600036009%800006000060007.5%b) The sales tax is regressiveProblem 8a) If tuition is set at $3000, then six students will enroll.b) The socially optimal enrollment would be eight students.c) $6000Problem 9a) 8 million packsb) 4 million packsc) $8 millionsAnswers to page 110 QuestionsQuestion 2 If the total price of the products produced in an economy increase more than proportionately compared to the reduction in the quantity produced, then GDP will increase.

This is a price inelastic effect.Question 6Prostitution, drug dealing, working construction for a day, and walking kids to a busQuestion 7 Natural capital lossAnswers to Page 111 ProblemsProblem 1StageValue Added102$90003$110004$28000Answers to page 129 QuestionQuestion 10Outsourcing increases U.S. productivity and profits while reducing U.S. productionCosts and prices. Answers to Page 130 ProblemsProblem 1a) 90.39%b) 9.61%c) 49.68%Problem 5a) 8.01%b) 13.79%Problem 12a) Seasonal unemployment b) Structural unemploymentc) Cyclical unemploymentAnswers to page 149 QuestionsQuestion 1Farmers would rather store their output than sell it during periods of hyperinflation as they would be speculating and waiting for the prices to hit high points so that they can make more profits.

This practice would lead to a deficit in supply, which will lead to rocketing of prices.Question 3Households lose from rising house prices while property owners gain.Question 7It is not advantageous to borrow money if you expect prices to rise. I would go for an adjustable interest rate loan to protect the loan from effects of inflation.Question 8People feel worse off because their purchasing power does not increase with an increase in income if prices increase as fast as the increase in income.

Answers to page 150 problemsProblem 1 Page 138 is missingProblem 3a) 20000-(0.05*20000) =$19000.b) $20,000 Problem 4a) 15%b) $1010c) The debtorProblem 10 b) 27.49%