1. The economy's income and expenditureThe following diagram presents a circular-flow model of a simple economy. The outer set of arrows (shown in green) shows the flow of dollars, and theinner set of arrows (shown in red) shows the corresponding flow of inputs and outputs.FirmsMarkets forGoods and ServicesMarkets forFactors of ProductionBased on this model, households earn income whenHouseholdspurchasein markets for factors of production.Suppose Megan earns $575 per week working as a flight attendant for Flyaway Airlines, She uses $9 to order a mojito cocktail at Little Havana. Little omework (Ch 10)Suppose Megan earns $575 per week working as a flight attendant for Flyaway Airlines. She uses $9 to order a mojito cocktail at Little Havana. LittleHavana pays Larry $275 per week to wait tables. Larry uses $150 to purchase air travel to Hawail from Flyaway Airlines.Identify whether each of the following events in this scenario occurs in the market for factors of production or the market for goods and services.Market for Goods andServicesOEventMegan earns $575 per week working for flyaway Airlines.Larry spends $150 to purchase air travel to Hawail from FlyawayAirlines.Megan spends $9 to order a mojito cocktail.Which of the elements of this scenario represent a flow from a household to a firm? This could be a flow of dollars, inputs, or outputs. Check all thatapply.The $275 per week Larry earns working for Little HavanaMegan's laborThe mojito Megan receivesMarket for Factors ofProduction:True or False: Gross domestic product (GDP) cannot be used to measure the economy's income.O TrueO False

Households earn income when "firms" purchase their "factors of production : land, labor, capital…

1. The economy's income and expenditure The following diagram presents a circular-flow model of a simple economy. The outer set of arrows (shown in green) shows the flow of dollars, and inner set of arrows (shown in red) shows the corresponding flow of inputs and outputs. Firms Markets for Goods and Services Markets for Factors of Production Households h

1. The economy's income and expenditure The following diagram presents a circular-flow model of a simple economy. The outer set of arrows (shown in green) shows the flow of dollars, and inner set of arrows (shown in red) shows the corresponding flow of inputs and outputs. Firms Markets for Goods and Services Markets for Factors of Production Households h

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Factor Models

Many attributes might be related to an asset's risk, including market capitalization (size), dividend yield, growth, price-earnings ratio, etc. The use of these traditional descriptors, however, presents a few problems:

Question

1. The economy's income and expenditure
The following diagram presents a circular-flow model of a simple economy. The outer set of arrows (shown in green) shows the flow of dollars, and the
inner set of arrows (shown in red) shows the corresponding flow of inputs and outputs.
Firms
Markets for
Goods and Services
Markets for
Factors of Production
Based on this model, households earn income when
Households
purchase
in markets for factors of production.
Suppose Megan earns $575 per week working as a flight attendant for Flyaway Airlines, She uses $9 to order a mojito cocktail at Little Havana. Little

omework (Ch 10)
Suppose Megan earns $575 per week working as a flight attendant for Flyaway Airlines. She uses $9 to order a mojito cocktail at Little Havana. Little
Havana pays Larry $275 per week to wait tables. Larry uses $150 to purchase air travel to Hawail from Flyaway Airlines.
Identify whether each of the following events in this scenario occurs in the market for factors of production or the market for goods and services.
Market for Goods and
Services
O
Event
Megan earns $575 per week working for flyaway Airlines.
Larry spends $150 to purchase air travel to Hawail from Flyaway
Airlines.
Megan spends $9 to order a mojito cocktail.
Which of the elements of this scenario represent a flow from a household to a firm? This could be a flow of dollars, inputs, or outputs. Check all that
apply.
The $275 per week Larry earns working for Little Havana
Megan's labor
The mojito Megan receives
Market for Factors of
Production:
True or False: Gross domestic product (GDP) cannot be used to measure the economy's income.
O True
O False

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18. If consumers in the U.S. buy $3.5 billion of clothes made by businesses in Bangladesh, how is this accounted for in the expenditure categories? a. this is spending on a consumer good so GDP rises b. the clothes are imports so they reduce GDP c. the clothes are both consumer goods and imports so GDP doesn't change d. the GDP could rise or fall, it depends on whether the clothes were taxed
2. The circular-flow model The following diagram presents a circular-flow model of a simple economy. The outer set of arrows (shown in green) shows the flow of dollars, and the inner set of arrows (shown in red) shows the corresponding flow of inputs and outputs. Based on this model, households earn income when purchase in factor markets. Suppose Maria earns $775 per week working as a doctor for the Medical Clinic. She uses $8 to have breakfast at Dinah's Diner. Dinah's Diner pays Kevin $475 per week to work as a short-order cook. Kevin uses $250 to purchase medical services from the Medical Clinic. Identify whether each of the following events in this scenario occurs in the factor market or the product market. Event Factor Market Product Market Kevin spends $250 to purchase medical services from the Medical Clinic. Maria spends $8 to have breakfast. Kevin earns $475 per week working for Dinah's Diner.…
13. The circular-flow model The following diagram presents a circular-flow model of a simple economy. The outer set of arrows (shown in green shows the flow of dollars, and the inner set of arrows (sh in red) shows the corresponding flow of inputs and outpu Firms Markets for Goods and Services Markets for Factors of Production Based on this model, households earn income when in factor markets. purchase Suppose Ginny earns $600 per week working as a cook fo Wingies. She uses $9 to take a spin class at Silver's Gym. Silver's Gym pays Eric $325 per week to work as a trainer. uses $125 to purchase chicken wings from Wingies. Households Identify whether each of the following events in this scenar occurs in the factor market or the product market. Factor Market Product Market O O Event Eric earns $325 per week working for Silver's Gym. Ginny spends $9 to take a spin class. Ginny earns $600 per week working for Wingles. Ginny's labor Which of the elements of this scenario represent a flow fr…
Suppose you have the following information about production levels of Ibs. of caviar and bottles of wine, and the market-clearing prices for each of the nine allocations: 5. Caviar Wine Pricecaviar Pricewine GDP Allocation $50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 $166.67 187.50 $350.00 175.00 A 90 100 B 80 200 214.29 250.00 300.00 116.67 87.50 70 300 60 400 E 50 500 70.00 375.00 500.00 58.33 50.00 F 40 600 G 30 700 H 20 800 750.00 43.75 I 10 900 1500.00 38.89 A. How much wine must be sacrificed to produce 1 more lb. of caviar? B. Is allocation point A efficient? (As in class, prove your conclusion with math) C. Which allocation point is efficient? (As in class, prove your conclusion with math) D. Suppose government assesses a tax of $40 per bottle of wine, but no tax on caviar. i) what will be the new equilibrium? Why? ii) how much of the tax is forward shifted? Explain iii) how much of the tax is backward shifted? Explain
2. The circular-flow model The following diagram presents a circular-flow model of a simple economy. The outer set of arrows (shown in green) shows the flow of dollars, and the inner set of arrows (shown in red) shows the corresponding flow of inputs and outputs. Markets for Goods and Services Firms Households Markets for Factors of Production Based on this model, firms earn revenue when households purchase goods and services v in product markets. Suppose Kyoko earns $625 per week working as jewelry appraiser for Classy's Jewelry Store. She uses $9 to buy a box of aspirin at Pillmart
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