Microeconomics
11th Edition
ISBN: 9781260507140
Author: David C. Colander
Publisher: McGraw Hill Education
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Chapter 11, Problem 13QE
To determine
Identify the impact of a fall in average product in the short-run
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2. Consider a world of two countries: Highland (H) and Lowland (L). Each country has an
average output of 9 and desires to smooth consumption. All income takes the form of capital
income and is fully consumed each period. Initially, there are two states of the world: Pandemic
(P) and Flood (F) each occurring with 50% probability. Pandemic affects Highland and lowers
the output there to 8, leaving Lowland unaffected with an output of 10. Flood affects Lowland
and lowers the output there to 8, leaving Highland unaffected with an output of 10.
a. Assume that households in each country own the entire capital stock of their own land. Fill
in the numbers on the following table.
Pandemic
Highland's income
Lowland's income
Flood
Variation about the mean
b. Assume that each country owns 50% of the other country's capital. Fill in the numbers on
the following table.
Pandemic
Flood
Variation about the mean
Highland's income
Lowland's income
c. Compare your answer to (a) and (b). Does…
3. This question explores IS and FX equilibria in a numerical example.
a. The consumption function is C = 1.5 + 0.8(Y - T). What is the marginal propensity to
consume (MPC)? What is the marginal propensity to save (MPS)?
b. The trade balance is TB = 5 [1-()] -
(0.2(Y-8). What is the marginal propensity to
consume foreign goods (MPCF)? What is the marginal propensity to consume home
goods(MPCH)?
c. The investment function is I = 3 - 10i. What is investment when the interest rate is equal
to 0.10=10%.
d. Assume government spending is G. Add up the four components of demand and write down
the expression for D. Make sure that you simplify the equation.
e. Derive the equation for the good market equilibrium using Y = D.
1. A firm has the following demand function: P = 60 – 0.5Q and its total cost is defined by TC= 13+ Qa. Find the maximum revenue b. Find the production to optimize the profit. c. Verify if the marginal revenue and marginal cost are the same at the profit-maximizing productionlevel. Exercise 6From the point of view of the firm, what decision criteria have been found relevant in the analysis ofproduction and profit? Provide two refernces with your answer.
Chapter 11 Solutions
Microeconomics
Ch. 11.1 - Prob. 1QCh. 11.1 - Prob. 2QCh. 11.1 - Prob. 3QCh. 11.1 - Prob. 4QCh. 11.1 - Prob. 5QCh. 11.1 - Prob. 6QCh. 11.1 - Prob. 7QCh. 11.1 - Prob. 8QCh. 11.1 - Prob. 9QCh. 11.1 - Prob. 10Q
Ch. 11 - Prob. 1QECh. 11 - Prob. 2QECh. 11 - Prob. 3QECh. 11 - Prob. 4QECh. 11 - Prob. 5QECh. 11 - Prob. 6QECh. 11 - Prob. 7QECh. 11 - Prob. 8QECh. 11 - Prob. 9QECh. 11 - Prob. 10QECh. 11 - Prob. 11QECh. 11 - Prob. 12QECh. 11 - Prob. 13QECh. 11 - Prob. 14QECh. 11 - Prob. 15QECh. 11 - Prob. 16QECh. 11 - Prob. 17QECh. 11 - Prob. 18QECh. 11 - Prob. 19QECh. 11 - Prob. 1QAPCh. 11 - Prob. 2QAPCh. 11 - Prob. 3QAPCh. 11 - Prob. 4QAPCh. 11 - Prob. 5QAPCh. 11 - Prob. 1IPCh. 11 - Prob. 2IPCh. 11 - Prob. 3IPCh. 11 - Prob. 4IPCh. 11 - Prob. 5IP
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