Given the Budget of $1000 P of X = 10 10 Q of X 0 10 TU of X (10s) 0 100 180 (Average) MU of X 0 10 MU/S of X 0 1 2000 20 8 0.8 30 20 7 27 40 50 60 70 80 90 100 310 365 415 6 5.5 100 460 502.5 542.5 581.5 5 4.5 4.25 4 3.9 0.7 0.6 0.55 0.5 0.45 0.425 0.4 0.39 P of Y = 500 500 Q of Y 0 1 2 3 4 5 TU of Y 0 510 870 1195 1485 1730 MU of Y 0 510 360 325 290 245 MU/S of Y 0 1.02 0.72 0.65 0.58 0.49 The optimal consumption bundle: of X; of Y

The Questor Corporation has experienced the following sales pattern over a 10-year period: Compute the equation of a trend line (similar to Equation 5.4) for these sales data to forecast sales for the next year. (Let 2004=0,2005=1, etc., for the time variable.) What does this equation forecast for sales in the year 2014? Use a first-order exponential smoothing model with a w of 0.9 to forecast sales for the year 2014.

Go to this website (http://www.measuringworth.com/ppowerus/) for the Purchasing Power Calculator at measuringWorth.com. How much money would it take today to purchase what one dollar would have bought in the year of your birth?

What are explicit and implicit costs?

Concert Opportunity Cost 2 You were able to purchase two tickets to an upcoming concert for $100 apiece when the concert was first announced three months ago. Recently, you saw that StubHub was listing similar seats for $225 apiece. What does it cost you to attend the concert?

The forecasting staff for the Prizer Corporation has developed a model to predict sales of its air-cushioned-ride snowmobiles. The model specifies that sales S vary jointly with disposable personal income Y and the population between ages 15 and 40, Z, and inversely with the price of the snowmobiles P. Based on past data, the best estimate of this relationship is S=kYZP where k has been estimated (with past data) to equal 100. If Y=11,000,Z=1,200, and P=20,000, what value would you predict for S? What happens if P is reduced to $17,500? How would you go about developing a value for k? What are the potential weaknesses of this model?

Logarithms are especially useful for comparing series with two divergent scales since 10 percent growth always looks the same, regardless of the starting level. When absolute levels matter, the raw data are more appropriate, but when growth rates are whats important, log scales are better.

Savings-Mart (a chain of discount department stores) sells patio and lawn furniture. Sales are seasonal, with higher sales during the spring and summer quarters and lower sales during the fall and winter quarters. The company developed the following quarterly sales forecasting model: Y t=8.25+0.125t2.75D1t+3.50D3t where Y t=predictedsales(million)inquartert 8.25=quarterlysales(million)whent=0 t=timeperiod(quarter)wherethefourthquarterof2002=0,firstquarterof2003=1,secondquarterof2003=2,... D1t={1forfirst-quarterobservations0otherwiseD2t={1forsecond-quarterobservations0otherwiseD3t={1forthird-quarterobservations0otherwise Forecast Savings-Marts sales of patio and lawn furniture for each quarter of 2010.

Why do you mink the U.S. experience with inflation over the last 50 years has been so much milder than in many other countries?

With in 1 or 2 percentage points, what has the U.S. inflation rate been during the last 20 years? Draw a graph to show the data.