EP ECON.TODAY:MACRO VIEW-MYECONLAB W/TX
EP ECON.TODAY:MACRO VIEW-MYECONLAB W/TX
19th Edition
ISBN: 9780134481234
Author: Miller
Publisher: PEARSON CO
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Chapter 19, Problem 7P
To determine

In the market for hand-made guitars, when the price of guitars is $800, annual revenue is $640,000. When the price falls to $700, annual revenues decline to $630,000. Over this range of guitar prices, is the demand for hand-made guitars elastic, unit elastic or inelastic?

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Difference-in-Difference In the beginning of 2001, North Dakota legalized fireworks. Suppose you are interested in studying the effect of the legalizing of fireworks on the number of house fires in North Dakota. Unlike North Dakota, South Dakota did not legalize fireworks and continued to ban them. You decide to use a Difference-in-difference (DID) Model. The numbers of house fires in each state at the end of 2000 and 2001 are as follows: Number of house fires in Number of house fires in Year North Dakota 2000 2001 35 50 South Dakota 54 64 a. What is the change in the outcome for the treatment group between 2000 and 2001? Show your working for full credit. (10 points) b. Can we interpret the change in the outcome for the treatment group between 2000 and 2001 as the causal effect of legalizing fireworks on number of house fires? Explain your answer. (10 points)
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C. Regression Discontinuity Birth weight is used as a common sign for a newborn's health. In the United States, if a baby has a birthweight below 1500 grams, the newborn is classified as having “very low birth weight". Suppose you want to study the effect of having very low birth weight on the number of hospital visits made before the baby's first birthday. You decide to use Regression Discontinuity to answer this question. The graph below shows the RD model: Number of hospital visits made before baby's first birthday 5 1400 1450 1500 1550 1600 Birthweight (in grams) a. What is the running variable? (5 points) b. What is the cutoff? (5 points) T What is the discontinuity in the graph and how do you interpret it? (10 points)
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How To Understand Elasticity (Economics); Author: Market Power;https://www.youtube.com/watch?v=1XXhpHJTglg;License: Standard Youtube License