# I need help with macroeconomics

Dre_fingerz

Answer the following from the Problems Appendix in the back of your textbook on pp. 326-328, and upload your answers through Blackboard:   Chapter 3: Questions 1 and 10    Chapter 4: Questions 2, 3, 4, and 12

CHAPTER 3

QUESTION 1

Determine whether each of the following would increase or decrease the opportunity cost for mothers who choose not to work outside the home. Explain your answer.

a.       Higher levels of education for women

Increase the opportunity cost. This is because the foregone option which is a raise in the education levels has gone up and hence the benefits from the foregone opportunity are more.

b.      Higher unemployment rates for women

Decrease in the opportunity costs. This is because the foregone opportunity was employment whose value/rate of employment has gone down and hence he won’t be losing so much.

c.       Higher average pay levels for women

Increase in the opportunity cost. The foregone option in this scenario is employment whose value has gone up since the average pay levels for women have gone up.

d.      Lower demand for labour in industries that traditionally employ large numbers of women

Decrease in the opportunity cost. This is because in the scenario, the foregone option is employment. The industries that employed women have a low demand for the women to employ. The choice she chose was to be a stay home mum is more beneficial since the demand for labour is down.

QUESTION 10

Suppose taxes are related to income as follows

Income                                 Taxes

\$ 1,000                                  \$ 200

\$    2,000                                 \$ 350

\$    3,000                                 \$ 450

What percentage of income is paid in  taxes at each level

\$1000 = 200/1000*100

= 20%

\$2,000 = 350/2000*100

=35%

\$3,000 = 450/3000*100

=15%

a.       Is the tax rate progressive, proportional or regressive

Progressive tax rates

b.      What is the margin tax rate on the first \$1,000 of income?

=20/100*1000

=200

The second \$1,000?

= 35/100*1000

=350

The third \$1000

= 15/100*1000

= 150

CHAPTER FOUR

QUESTION 2

For each of the following pair of goods, determine whether the goods are substitutes, compliments or unrelated

a.       Peanut butter and jelly – substitute goods

b.      Private and public transportation – substitute goods

c.       Coke and Pepsi -  substitute goods

d.      Alarm clocks and automobiles-unrelated goods

e.       Golf clubs and golf balls-complementary goods

QUESTION 3

List five things that are held constant along a market demand curve, and identify the change that would shift the demand curve to the right-that is what would increase demand.

Factors that are held constant include:

Ø  Income of the consumer

Ø  Change in taste and preferences

Ø  Season

Ø  Future expectations of the market

Ø  Prices of related goods

Changes that would shift the demand curve to the right include:

Ø  Rise in the income of consumers

Ø  Peak season of the product

Ø  Fall in price of the complementary product

Ø  Rise in price of a substitute

Ø  Change in preference and taste and they now prefer the subject product

QUESTION 4

Why is a firm willing and able to increase the quantity supplied as the product price increases?

This is because there is an increase in the profit margin since increased supply means that there is more making of profit. This could be because the production costs of mass goods is lower.

QUESTION 12

Assume the market for corn is depicted as in the table below

a.       Complete the table below

b.      What market pressure occurs when quantity demanded exceeds quantity supplied? Explain.

Upward pressure. This is because the pressure caused by demand exceeding supply leads to an increase in the price of the product.

c.       What market pressure occurs when quantity supplied exceeds quality demanded. Explain

Downward pressure. This is because the supply is more than demanded and hence a reduction in price.

d.      What is the equilibrium price?

\$ 2.20

e.       What could change the equilibrium price?

An increase in the demand of a product exceeding the supply of the product

An increase in supply exceeding the amount that is being supplied.

f.        At each price in the first column of the table below, how much is sold?

\$1.80 = 200                                 \$ 2.40 = 230

\$2.00 = 230                                  \$2.60 = 200

\$2.20 = 270                                   \$ 2.80 = 180

 Price per bushel  (\$) Quantity demanded(millions of bushels) Quantity supplied(millions of bushels) Surplus/shortage Will price rise or fall 1.80 320 200 120 Rise in price 2.00 300 230 70 Rise in price 2.20 270 270 0 Price remains constant 2.40 230 300 70 Fall in price 2.60 200 330 130 Fall in price 2.80 180 350 170 Fall in price

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