MACRO ECON 6
6th Edition
ISBN: 9780357689820
Author: MCEACHERN
Publisher: CENGAGE L
expand_more
expand_more
format_list_bulleted
Question
Chapter 1, Problem 7P
To determine
The pitfalls in economic thinking & identifying fallacy
Introduction:
In order to understand the logical reason behind the causes and the effects of related case along with it relating it with an underlying assumption
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
1) Suppose the U.S. government wants to stop importing foreign cars. They believe by not importing cars from other
countries they will have absolute advantage in manufacturing cars, and this will help the U.S. economy. Explain what
is wrong with this idea. Use a graph to illustrate your point.
(Figure: Market Demand for Oranges) Consider the figure Market Demand for Oranges. The amount by which the total
If the price of oranges is
benefits of oranges to consumers exceed consumers' total expenditures on oranges is called
B, this quantity is depicted by the area
Price
(per bushel)
0
producer surplus; BCD
consumer surplus; OCDE
consumer surplus; BCD
net benefit; OBDE
Market
Demand
Quantity
(per period)
(Figure: Demand and Supply of Sugar) Use Figure: Demand and Supply of Sugar. A
factor that may have shifted the supply from S₁ to S₂ is:
Price
(per pound)
$50
40
40
30
25
20
15
10
0
100
200
S₁
$2
D
500
600
300 400
Quantity of sugar (per month)
better technology in the production of sugar.
increased demand.
lower labor productivity in sugar production.
increased prices of substitutes in the production of sugar.
Knowledge Booster
Similar questions
- 2. Change in Demand Determinants: While supply-side factors played a significant role in the "perfect storm," changes in the demand for final crop products also contributed to the situation. As previously mentioned, the demand for fertilizer is derived from the demand for the crops that farmers grow. The weather-related disruptions to the fertilizer supply chain, along with increased demand for US crop products (as mentioned in the People's Republic of China scenario), could have led to a situation where farmers wanted more fertilizer to compensate for potential yield losses. Bring me the graph or curvearrow_forwardIs PRICE (Dollars per pound) North South APPLES (Thousands of pounds per year) (?) In the North, if the price goes up by $0.20 per pound, then the quantity supplied in the North goes up by 100 pounds per year. If the price of apples goes up by $0.20 in the South, what will happen to the quantity supplied? The quantity will increase by 100 pounds per year. The quantity will increase by 50 pounds per year. There is not enough information given to determine the supply change in the South. The quantity will decrease by 100 pounds per year.arrow_forward130.) Fred Durst and Carson Daly are lost in the Amazon wilderness. Other than their evening discussions about Christina Aguilera, they have to find food on which to subsist. The only two edible items they are able to find are bananas and crickets. Due to Carson’s big eyes, he is able to catch 40 crickets in a day if he spends his entire day hunting them down. If he picks bananas all day he can collect 10. Fred is much better at picking bananas. If he spends his entire day picking bananas, he can pick 30. If he spends his entire day hunting down crickets, he can find 60. Both Fred and Carson can choose to produce any linear combination above. Who is the low-cost producer of bananas? Fred Durst, because he only has to give up 1/2 Crickets in order to get an additional banana Fred Durst, because he only has to give up 2 Crickets in order to get an additional banana Carson Daly, because he only has to give up 1/4 Crickets in order to get an…arrow_forward
- Question 2 If a movie theater ticket is a normal good, what do you suppose would happen to price and quantity during an economic recession? Question 2 options: (highlight correct answer) Price and quantity would both increase Price would increase and quantity decrease Price and quantity would both decrease Price would decrease and quantity increasearrow_forward15 - : Which of the following is not a variable that affects the quantity demanded? a) tastes and preferences B) Consumer's income NS) own price of the commodity D) Price of related goods TO) Production costarrow_forward14. Application: Demand elasticity and agriculture The following graph illustrates the market for cashews. It plots the monthly supply of cashews and the monthly demand for cashews. Suppose an increase in pests destroys a major portion of cashew trees. Show the effect this shock has on the market for cashews by shifting the demand curve, supply curve, or both. Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther. PRICE (Dollars per ton) 30 24 18 12 6 0 0 4 8 12 Supply Demand QUANTITY (Thousands of tons) 16 Total Revenue (Thousands of Dollars) 20 Demand Supply ? One of the growers is pleased with the price increase caused by the pests because he believes it will lead to increased revenue. Using elasticities, you will be able to determine whether this price change will lead to a rise or fall in total revenue in this market. Using the…arrow_forward
- 1.) Production, Inputs, and Cost: Building Blocks for Supply Analysis The firm can generally substitute one input for another. Whether or not it pays to substitute depends on the relative costs of labor and machinery. First, describe the alternative types of input proportions available to the firm. Then, describe the combination of inputs that represent the least costly way for the firm to produce its goods. Lastly, give one example of the firm’s substitutability from a recent news article.arrow_forwardGive typing answer with explanation and conclusionarrow_forwardSuppose the economy is operating at potential GDP when It experiences an increase in export demand. How might the economy increase production of exports to meet this demand, given that the economy is already at full employment?arrow_forward
- Question 35 Sweetland is a small country that imports cars from the world market at a price of $25,000. The country has an auto parts manufacturing industry that can meet the demand for auto parts by domestic car manufacturers. (The domestic cars are perfect substitutes for imported cars). Each car production requires auto parts worth $20,000. The government of Sweetland imposes a 25% tariff on imported cars so that domestic car manufacturers can now charge up to $31,250 for a car. 1. Define in words the effective rate of protection. What is the effective rate of protection for domestic car manufacturers? 2. Now suppose that to encourage domestic auto parts industry, government imposes a 25% tariff on auto parts, but no tariff on imported cars. 1. What is the effective rate of protection for domestic car manufacturers? 2. What is the nominal rate of protection for the domestic auto parts industry? Show all your work.arrow_forward4). APPLEWATCH (this concentrates on the mathematical part of the readings) (19 Points) a) This question is based on the impact of Lowering the Price of the Apple watch to $312 (note the original price of $349) a. Calculate the Point Price Elasticity of Demand for the Apple Watch (this requires you to show your work, calculate the number and explain the results of the Price Elasticity of Demand—in effect, is it elastic or inelastic and why-you should use the original price and the new price of $312)? (6 Points) b. Calculate new Total Revenue given this price reduction (begin by calculating what was initial total revenue when the price was $349). Note—use the demand function to calculate quantity demanded. (4 Points) c. Given a Variable Cost that is provided on Page 5 of the lecture Powerpoint (and not including the sunk/fixed costs) what is the profit maximizing output given a price of $349? (3 points) b) If Apple kept their price at $349 and Samsun reduced the price of their GearS to…arrow_forwardHomework Question 7: The Caviar Price Index Belugaland is an economy that produces only 3 goods: spear guns, caviar and fish fillets. The prices and quantities of goods in Belugaland are provided in the table below. In case you did not know already, caviar and fish fillets are consumer goods that are produced by killing fish. Spear guns are used by fishermen in Belugaland to shoot and kill fish. Assume there are no other goods or services produced in the economy. Also assume there are no imports or exports. Year Price Quantity Year Price Quantity $100 2020 2020 $5 2020 $50 20 Good Pounds of Caviar Fish Fillets Spear Guns 20 400 2022 $125 20 2022 $5 440 2022 $100 10 a) Calculate nominal GDP, real GDP, the GDP deflator and the PCE deflator for 2020 and 2022, using 2020 as the base year. b) Suppose that the CPI was first set up in 2020 (i.e. the reference year was 2020). What goods would be chosen for the CPI basket, and in what quantities? Briefly explain how you came about your answer.…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Economics 2eEconomicsISBN:9781947172364Author:Steven A. Greenlaw; David ShapiroPublisher:OpenStax
Principles of Economics 2e
Economics
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:OpenStax