
Concept explainers
A
in what manner firms and people decide if it’s worth to make investment in capital improvements.
Concept Introduction:
Capital Improvement: an addition or arrangement that improves the value of a property or replacement or upgrade that prolongs the lifespan of the asset.
A

Explanation of Solution
The firms and individuals determine if it’s worth it to invest in these resources based on these points:
The firms or individuals determine if it is worth to invest in capital improvements when the costs of additional capital are lesser than the revenue increase with the additional capital. In simple words, when the marginal returns from the capital is greater than the marginal cost of capital.
B
in what manner firms and people decide if it’s worth for new hires.
Concept Introduction:
Hiring: is defined as a practice of evaluating, finding and establishing a working relationship between new employees, contractors, interns etc
B

Explanation of Solution
For hiring additional workers, the firms and the individuals take their decisions by looking at the marginal returns of additional workers to the costs of hiring the additional workers. When the returns are greater than the costs of employing an additional worker, it would be worth hiring.
C
in what manner firms and people decide where to work.
C

Explanation of Solution
Despite this being akin to individuals and firms independently, in most cases, the location where to work and expansion is based on the conditions such as proximity to the market, the rules and regulations of a particular locality and availability of resources.
Want to see more full solutions like this?
Chapter 11 Solutions
ECON MICRO (with ECON MICRO Online, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)
- Zbsbwhjw8272:shbwhahwh Zbsbwhjw8272:shbwhahwh Zbsbwhjw8272:shbwhahwhZbsbwhjw8272:shbwhahwhZbsbwhjw8272:shbwhahwharrow_forwardUse the Feynman technique throughout. Assume that you’re explaining the answer to someone who doesn’t know the topic at all:arrow_forwardUse the Feynman technique throughout. Assume that you’reexplaining the answer to someone who doesn’t know the topic at all: 4. Draw a Keynesian AD curve in P – Y space and list the shift factors that will shift theKeynesian AD curve upward and to the right. Draw a separate Classical AD curve in P – Yspace and list the shift factors that will shift the Classical AD curve upward and to the right.arrow_forward
- Use the Feynman technique throughout. Assume that you’re explaining the answer to someone who doesn’t know the topic at all: 10. What is the mechanism or process that allows the expenditure multiplier to “work” in theKeynesian Cross Model? Explain and show both mathematically and graphically. What isthe underpinning assumption for the process to transpire?arrow_forwardUse the Feynman technique throughout. Assume that you’re explaining the answer to someone who doesn’t know the topic at all: 15. How is the Keynesian expenditure multiplier implicit in the Keynesian version of the AD/ASmodel? Explain and show mathematically. (note: this is a tough one)arrow_forwardUse the Feynman technique throughout. Assume that you’re explaining the answer to someone who doesn’t know the topic at all: 13. What would happen to the net exports function in Europe and the US respectively if thedemand for dollars rises worldwide? Explain why.arrow_forward
- 20. Given the mathematical model below, solve for the expenditure multiplier for a) government spending, G; and b) for consumer taxes, T. (medium difficulty) Y=C+I+G C=Co+b(Y-T) 1 = 10 T=To+tY G = Go+gYarrow_forwardUse the Feynman technique throughout. Assume that you’re explaining the answer to someone who doesn’t know the topic at all: 11. What exactly is a rectangular hyperbola and what relevance is it to classical economics?arrow_forwardUse the Feynman technique throughout. Assume that you’re explaining the answer to someone who doesn’t know the topic at all: 9. Explain the difference between absolute and comparative advantage in a family setting, i.e.using parents and children. What can we glean from knowing about comparative andabsolute advantages?arrow_forward
- Use the Feynman technique throughout. Assume that you’re explaining the answer to someone who doesn’t know the topic at all: 18. Explain why most economists believe it is absolutely necessary to allow free trade in aneconomy. Why is it harmful (under most circumstances) to have tariffs and trade barriers?arrow_forwardUse the Feynman technique throughout. Assume that you’re explaining the answer to someone who doesn’t know the topic at all: 19. How does the multiplier work in theory? How would you interpret Robert Barro’s empiricalfindings of a multiplier (note, not the MPC) of 0.8? What about Christine Romar’s finding ofa multiplier of 1.5?arrow_forwardUse the Feynman technique throughout. Assume that you’re explaining the answer to someone who doesn’t know the topic at all: 16. Explain the difference between absolute and comparative advantage. Be specific. How woulda country (or person) know that they had such an advantage?arrow_forward
- Principles of Economics 2eEconomicsISBN:9781947172364Author:Steven A. Greenlaw; David ShapiroPublisher:OpenStaxManagerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
- Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning




