The real GDP and actual price level when the actual price level exceeds the expected price level. Concept Introduction: Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output. Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Question

The following diagram illustrates the demand and marginal revenue curves facing a monopoly in an industry with no economies or diseconomies of scale. In the short and long run, MC = ATC. a. Calculate the values of profit, consumer surplus, and deadweight loss, and illustrate these on the graph. b. Repeat the calculations in part a, but now assume the monopoly is able to practice perfect price discrimination.

Answer 1

Question

Chapter 10, Problem 3P

Sub-part

A

To determine

The real GDP and actual price level when the actual price level exceeds the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Sub-part

B

To determine

The expansionary and recessionary Gap when the actual price level exceeds the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Sub-part

C

To determine

The real GDP and actual price level when the actual price level is lower than the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Sub-part

D

To determine

The expansionary and recessionary Gap when the actual price level is lower than the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Sub-part

E

To determine

The real GDP and actual price level when the actual price level equals the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Sub-part

F

To determine

The expansionary and recessionary Gap when the actual price level is equal to the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

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The following diagram illustrates the demand and marginal revenue curves facing a monopoly in an industry with no economies or diseconomies of scale. In the short and long run, MC = ATC. a. Calculate the values of profit, consumer surplus, and deadweight loss, and illustrate these on the graph. b. Repeat the calculations in part a, but now assume the monopoly is able to practice perfect price discrimination.

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Answer 2

Question

Chapter 10, Problem 3P

Sub-part

A

To determine

The real GDP and actual price level when the actual price level exceeds the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Sub-part

B

To determine

The expansionary and recessionary Gap when the actual price level exceeds the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Sub-part

C

To determine

The real GDP and actual price level when the actual price level is lower than the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Sub-part

D

To determine

The expansionary and recessionary Gap when the actual price level is lower than the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Sub-part

E

To determine

The real GDP and actual price level when the actual price level equals the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Sub-part

F

To determine

The expansionary and recessionary Gap when the actual price level is equal to the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Expert Solution & Answer

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Answer 3

Question

Chapter 10, Problem 3P

Sub-part

A

To determine

The real GDP and actual price level when the actual price level exceeds the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Sub-part

B

To determine

The expansionary and recessionary Gap when the actual price level exceeds the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Sub-part

C

To determine

The real GDP and actual price level when the actual price level is lower than the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Sub-part

D

To determine

The expansionary and recessionary Gap when the actual price level is lower than the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Sub-part

E

To determine

The real GDP and actual price level when the actual price level equals the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Sub-part

F

To determine

The expansionary and recessionary Gap when the actual price level is equal to the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Expert Solution & Answer

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Answer 4

Question

Chapter 10, Problem 3P

Sub-part

A

To determine

The real GDP and actual price level when the actual price level exceeds the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Sub-part

B

To determine

The expansionary and recessionary Gap when the actual price level exceeds the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Sub-part

C

To determine

The real GDP and actual price level when the actual price level is lower than the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Sub-part

D

To determine

The expansionary and recessionary Gap when the actual price level is lower than the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Sub-part

E

To determine

The real GDP and actual price level when the actual price level equals the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Sub-part

F

To determine

The expansionary and recessionary Gap when the actual price level is equal to the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Expert Solution & Answer

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Answer 5

Chapter 10, Problem 3P

Sub-part

A

To determine

The real GDP and actual price level when the actual price level exceeds the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Sub-part

B

To determine

The expansionary and recessionary Gap when the actual price level exceeds the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Sub-part

C

To determine

The real GDP and actual price level when the actual price level is lower than the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Sub-part

D

To determine

The expansionary and recessionary Gap when the actual price level is lower than the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Sub-part

E

To determine

The real GDP and actual price level when the actual price level equals the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Sub-part

F

To determine

The expansionary and recessionary Gap when the actual price level is equal to the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Answer 6

Chapter 10, Problem 3P

Sub-part

A

To determine

The real GDP and actual price level when the actual price level exceeds the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Answer 7

Chapter 10, Problem 3P

Sub-part

A

To determine

The real GDP and actual price level when the actual price level exceeds the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Answer 8

Sub-part

B

To determine

The expansionary and recessionary Gap when the actual price level exceeds the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Answer 9

Sub-part

B

To determine

The expansionary and recessionary Gap when the actual price level exceeds the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Answer 10

Sub-part

C

To determine

The real GDP and actual price level when the actual price level is lower than the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Answer 11

Sub-part

C

To determine

The real GDP and actual price level when the actual price level is lower than the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Answer 12

Sub-part

D

To determine

The expansionary and recessionary Gap when the actual price level is lower than the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Answer 13

Sub-part

D

To determine

The expansionary and recessionary Gap when the actual price level is lower than the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Answer 14

Sub-part

E

To determine

The real GDP and actual price level when the actual price level equals the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Answer 15

Sub-part

E

To determine

The real GDP and actual price level when the actual price level equals the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Answer 16

Sub-part

F

To determine

The expansionary and recessionary Gap when the actual price level is equal to the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Answer 17

Sub-part

F

To determine

The expansionary and recessionary Gap when the actual price level is equal to the expected price level.

Concept Introduction:

Expansionary Gap: Expansionary Gap is the gap between actual output and potential output under full employment situation, when actual output is more than potential output.

Recessionary Gap: Recessionary Gap is the gap between actual output and potential output under full employment situation, when actual output is less than potential output.

Answer 18

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Answer 23

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Answer 29

Ch. 10 - Prob. 1P Ch. 10 - Prob. 2P Ch. 10 - Prob. 3P Ch. 10 - Prob. 4P Ch. 10 - Prob. 5P Ch. 10 - Prob. 6P

Solution Summary: The author explains the expansionary and recessionary gap between actual output and potential output under full employment situation.

Chapter 10 Solutions