4. Are the rental prices affected by the number of students in a university area? In(rent) Bo + B₁ ln(pop) + B₂ In(avginc) + B3pctstu + u rent denotes the average monthly rent in a university area, pop is the urban population, avginc is the average urban income, and pctstu denotes the percentage of students in the urban population. Someone would like to test the assumption 'the rental prices are not affected by the ratio of students population to the urban population'. State the hypothesis test.

4. Are the rental prices affected by the number of students in a university area? In(rent) Bo + B₁ ln(pop) + B₂ In(avginc) + B3pctstu + u rent denotes the average monthly rent in a university area, pop is the urban population, avginc is the average urban income, and pctstu denotes the percentage of students in the urban population. Someone would like to test the assumption 'the rental prices are not affected by the ratio of students population to the urban population'. State the hypothesis test.

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter18: Pricing The Factors Of Production

Section: Chapter Questions

Problem 4TY

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4. Supply and demand for loanable funds The following graph shows the market for loanable funds in a closed economy. The upward-sloping orange line represents the supply of loanable funds, and the downward-sloping blue line represents the demand for loanable funds. INTEREST RATE (Percent) 6 5 4 32 1 0 0 100 Supply 200 300 400 LOANABLE FUNDS (Billions of dollars) Demand 500 600 4
3. Supply and demand for loanable funds The following graph shows the market for loanable funds in a closed economy. The upward-sloping orange line represents the supply of loanable funds, and the downward-sloping blue line represents the demand for loanable funds. Supply Demand 100 200 300 400 500 LOANABLE FUNDS (Billions of dollars) A INTEREST RATE (Percent) m 0 0 600
Suppose that a person has 2000 hours to allocate each year between leisure and work. a. Derive the equation of his budget constraint given an hourly wage of $(15)/hour. b) Graph his budget constraint line based on the equation you derived in part a. (Consumption (C) on the vertical axis and leisure (L) on the horizontal axis). Please make sure to include the value for the vertical and horizontal intercepts. c) Now suppose that the local government introduces an income guarantee program for single parents in which the income transfer is $10,000 per year if an individual does not work during that year (this dollar amount represents the benefit guarantee). If the individual decides to work, this transfer program imposes a 100% benefit reduction rate (e. g.. each additional hourly wage earned is reduced by 100%). Derive the new budget constraint equation that corresponds to this scenario. d) Draw the budget line that corresponds to the new scenario on a new graph. (Consumption (C) on the…
7 Graphically illustrate and explain the concept of location rent.
Store Travel Time Each Way (minutes) Price of a Skirt (Dollars per skirt) Local Department Store 15 103 Across Town 30 87 Neighboring City 60 64 Juanita makes $16 an hour at work. She has to take time off work to purchase her skirt, so each hour away from work costs her $16 in lost income. Assume that returning to work takes Juanita the same amount of time as getting to a store and that it takes her 30 minutes to shop. As you answer the following questions, ignore the cost of gasoline and depreciation of her car when traveling. Complete the following table by computing the opportunity cost of Juanita's time and the total cost of shopping at each location. Store Opportunity Cost of Time Price of a Skirt Total Cost (Dollars) (Dollars per skirt) (Dollars) Local Department Store 103 Across Town 87 Neighboring City 64
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The following graph shows the market for loanable funds in a closed economy. The upward-sloping orange line represents the supply of loanable funds, and the downward-sloping blue line represents the demand for loanable funds. 8 7 Supply 6 400, 4 Demand 100 200 300 400 500 600 700 800 LOANABLE FUNDS (Billions of dollars) INTEREST RATE (Percent)
1. According to part A of Table 5-1, what education level loses most (i.e., has the greatest decrease in wage) from immigration to the United States? Does this result depend on keeping the rental on capital constant? Explain why or why not. 2. Suppose that computers use 2 units of capital for each worker, so that KC = 2 • LC, whereas shoes use 0.5 unit of capital for each worker, so that KS = 0.5 • LS. There are 100 workers and 100 units of capital in the economy. a. Solve for the amount of labor and capital used in each industry. Hint: The box diagram shown in Figure 5-7 means that the amount of labor and capital used in each industry must add up to the total for the economy, so that Use these two equations to solve for LC and LS, and then calculate the amount of capital used in each industry using KC = 2 • LC and KS = 0.5 • LS. b. Suppose that the number of workers increases to 125 due to immigration, keeping total capital fixed at 100. Again, solve…
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A young chef is considering opening his own sushi bar. To do so, he would have to quit his current job, which pays $30,000 a year, and take over a restaurant space that he owns and currently rents to his brother for $24,000 a year. His expenses at the sushi bar would be $50,000 for food and $2,000 for gas and electricity. Suppose the sushi bar’s revenue from the first year is $120,000. What is the chef’s economics profit? 14,000 -14,000 66,000 68,000
2. What will happen to the income of pediatricians? in the early 1990s, concerns about the supply of pediatricians led to an expansion of pediatric training. As a result, the number of pediatricians is expected to grow from about 45,000 in 2005 to about 60,000 in 2022. In contrast, the number of children is expected to grow by less than 10 percent, meaning that the number of children per pediatrician should fall by 20 percent (Shipman Lurie, and Goodman 2004). The decline in the number of children per pediatrician seems likely to result in lower incomes for pediatrician. Further, this decrease may be amplified by the emergence of retail clinics that are staffed by nurse practitioners and offer convenient, walk in services for many common childhood illnesses. Model the effects of the drop in the number of children per pediatrician using per pediatrician demand and supply services. How do you expect those curve to shift over time? What impact will this shift have on the incomes of…