Suppose the following list of events describes all of the economic activity resulting from an increase in government spending. Suppose that at each step after the Initial one, the marginal propensity to consume is 0.88 and the tax rate is 19%. Step 0. The government spends $7000 on meat to host a very large dinner for foreign diplomats. Step A. The butcher takes the Income earned by selling the meat, saves some, and spends the rest on a wedding cake for his daughter. Step B. The baker who produced the wedding cake saves some of her earnings and uses the rest to purchase beautiful candlesticks as gifts for all of her friends. Step C. The local candlestick maker saves some of his revenue for retirement and spends the rest on bulding materials to Improve his house. Instructions: Modify the settings in the Interactive tool to represent this event. Then click "Spending Rounds" and use the table to answer the following questions. Round answers to the nearest cent, If necessary. How much does the candlestick maker earn for selling the candlesticks? $ How much does the candlestick maker spend on bullding materials? $

Suppose the following list of events describes all of the economic activity resulting from an increase in government spending. Suppose that at each step after the Initial one, the marginal propensity to consume is 0.88 and the tax rate is 19%. Step 0. The government spends $7000 on meat to host a very large dinner for foreign diplomats. Step A. The butcher takes the Income earned by selling the meat, saves some, and spends the rest on a wedding cake for his daughter. Step B. The baker who produced the wedding cake saves some of her earnings and uses the rest to purchase beautiful candlesticks as gifts for all of her friends. Step C. The local candlestick maker saves some of his revenue for retirement and spends the rest on bulding materials to Improve his house. Instructions: Modify the settings in the Interactive tool to represent this event. Then click "Spending Rounds" and use the table to answer the following questions. Round answers to the nearest cent, If necessary. How much does the candlestick maker earn for selling the candlesticks? $ How much does the candlestick maker spend on bullding materials? $

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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If company A manufactures t-shirts and sells them to retailers for US$9.80 each.It has fixed costs of $2625 related to the production of the t-shirts, and the production cost per unit is US$2.30. Company B also manufactures t-shirts and selll them directly to consumers.The demand for its product is p = 15-x/ 125, its production cost per unit is US$5.00 and its fixed cost are the same as for company A . How many t-shirts must company B sell to maximise its profit?
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