Macroeconomics
10th Edition
ISBN: 9780134896441
Author: ABEL, Andrew B., BERNANKE, Ben, CROUSHORE, Dean Darrell
Publisher: PEARSON
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Question
Chapter 2, Problem 6WWMD
b)
To determine
The graphical representation of quarterly growth rates of real
b)
Expert Solution
Explanation of Solution
The data of quarterly growth rates of real GDP from 1960 to last year using the percent change from a year ago is as follows:
| Date | GDP, percentage change from quarter one year ago. |
| 1960-01-01 | 4.9 |
| 1960-04-01 | 2.1 |
| 1960-07-01 | 2.5 |
| 1960-10-01 | 0.9 |
| 1961-01-01 | -0.7 |
| 1961-04-01 | 1.6 |
| 1961-07-01 | 3.0 |
| 1961-10-01 | 6.4 |
| 1962-01-01 | 7.6 |
| 1962-04-01 | 6.7 |
| 1962-07-01 | 6.0 |
| 1962-10-01 | 4.3 |
| 1963-01-01 | 3.6 |
| 1963-04-01 | 3.8 |
| 1963-07-01 | 4.8 |
| 1963-10-01 | 5.2 |
| 1964-01-01 | 6.2 |
| 1964-04-01 | 6.2 |
| 1964-07-01 | 5.5 |
| 1964-10-01 | 5.2 |
| 1965-01-01 | 5.5 |
| 1965-04-01 | 5.7 |
| 1965-07-01 | 6.3 |
| 1965-10-01 | 8.5 |
| 1966-01-01 | 8.5 |
| 1966-04-01 | 7.5 |
| 1966-07-01 | 6.0 |
| 1966-10-01 | 4.5 |
| 1967-01-01 | 2.9 |
| 1967-04-01 | 2.6 |
| 1967-07-01 | 2.7 |
| 1967-10-01 | 2.7 |
| 1968-01-01 | 3.8 |
| 1968-04-01 | 5.5 |
| 1968-07-01 | 5.3 |
| 1968-10-01 | 5.0 |
| 1969-01-01 | 4.5 |
| 1969-04-01 | 3.1 |
| 1969-07-01 | 3.0 |
| 1969-10-01 | 2.0 |
| 1970-01-01 | 0.3 |
| 1970-04-01 | 0.2 |
| 1970-07-01 | 0.4 |
| 1970-10-01 | -0.2 |
| 1971-01-01 | 2.7 |
| 1971-04-01 | 3.1 |
| 1971-07-01 | 3.0 |
| 1971-10-01 | 4.4 |
| 1972-01-01 | 3.5 |
| 1972-04-01 | 5.3 |
| 1972-07-01 | 5.4 |
| 1972-10-01 | 6.9 |
| 1973-01-01 | 7.6 |
| 1973-04-01 | 6.3 |
| 1973-07-01 | 4.8 |
| 1973-10-01 | 4.0 |
| 1974-01-01 | 0.6 |
| 1974-04-01 | -0.2 |
| 1974-07-01 | -0.6 |
| 1974-10-01 | -1.9 |
| 1975-01-01 | -2.3 |
| 1975-04-01 | -1.8 |
| 1975-07-01 | 0.8 |
| 1975-10-01 | 2.6 |
| 1976-01-01 | 6.2 |
| 1976-04-01 | 6.2 |
| 1976-07-01 | 5.0 |
| 1976-10-01 | 4.3 |
| 1977-01-01 | 3.2 |
| 1977-04-01 | 4.5 |
| 1977-07-01 | 5.8 |
| 1977-10-01 | 5.0 |
| 1978-01-01 | 4.1 |
| 1978-04-01 | 6.1 |
| 1978-07-01 | 5.2 |
| 1978-10-01 | 6.7 |
| 1979-01-01 | 6.5 |
| 1979-04-01 | 2.7 |
| 1979-07-01 | 2.4 |
| 1979-10-01 | 1.3 |
| 1980-01-01 | 1.4 |
| 1980-04-01 | -0.8 |
| 1980-07-01 | -1.6 |
| 1980-10-01 | 0.0 |
| 1981-01-01 | 1.6 |
| 1981-04-01 | 3.0 |
| 1981-07-01 | 4.3 |
| 1981-10-01 | 1.3 |
| 1982-01-01 | -2.2 |
| 1982-04-01 | -1.0 |
| 1982-07-01 | -2.6 |
| 1982-10-01 | -1.4 |
| 1983-01-01 | 1.4 |
| 1983-04-01 | 3.3 |
| 1983-07-01 | 5.7 |
| 1983-10-01 | 7.9 |
| 1984-01-01 | 8.6 |
| 1984-04-01 | 8.0 |
| 1984-07-01 | 6.9 |
| 1984-10-01 | 5.6 |
| 1985-01-01 | 4.6 |
| 1985-04-01 | 3.7 |
| 1985-07-01 | 4.3 |
| 1985-10-01 | 4.2 |
| 1986-01-01 | 4.1 |
| 1986-04-01 | 3.7 |
| 1986-07-01 | 3.1 |
| 1986-10-01 | 2.9 |
| 1987-01-01 | 2.7 |
| 1987-04-01 | 3.4 |
| 1987-07-01 | 3.3 |
| 1987-10-01 | 4.5 |
| 1988-01-01 | 4.2 |
| 1988-04-01 | 4.5 |
| 1988-07-01 | 4.2 |
| 1988-10-01 | 3.8 |
| 1989-01-01 | 4.3 |
| 1989-04-01 | 3.7 |
| 1989-07-01 | 3.9 |
| 1989-10-01 | 2.7 |
| 1990-01-01 | 2.8 |
| 1990-04-01 | 2.4 |
| 1990-07-01 | 1.7 |
| 1990-10-01 | 0.6 |
| 1991-01-01 | -1.0 |
| 1991-04-01 | -0.5 |
| 1991-07-01 | -0.1 |
| 1991-10-01 | 1.2 |
| 1992-01-01 | 2.9 |
| 1992-04-01 | 3.2 |
| 1992-07-01 | 3.7 |
| 1992-10-01 | 4.4 |
| 1993-01-01 | 3.3 |
| 1993-04-01 | 2.8 |
| 1993-07-01 | 2.3 |
| 1993-10-01 | 2.6 |
| 1994-01-01 | 3.4 |
| 1994-04-01 | 4.2 |
| 1994-07-01 | 4.3 |
| 1994-10-01 | 4.1 |
| 1995-01-01 | 3.5 |
| 1995-04-01 | 2.4 |
| 1995-07-01 | 2.7 |
| 1995-10-01 | 2.2 |
| 1996-01-01 | 2.6 |
| 1996-04-01 | 4.0 |
| 1996-07-01 | 4.1 |
| 1996-10-01 | 4.4 |
| 1997-01-01 | 4.3 |
| 1997-04-01 | 4.3 |
| 1997-07-01 | 4.7 |
| 1997-10-01 | 4.5 |
| 1998-01-01 | 4.9 |
| 1998-04-01 | 4.1 |
| 1998-07-01 | 4.1 |
| 1998-10-01 | 4.9 |
| 1999-01-01 | 4.8 |
| 1999-04-01 | 4.7 |
| 1999-07-01 | 4.7 |
| 1999-10-01 | 4.8 |
| 2000-01-01 | 4.2 |
| 2000-04-01 | 5.3 |
| 2000-07-01 | 4.1 |
| 2000-10-01 | 3.0 |
| 2001-01-01 | 2.3 |
| 2001-04-01 | 1.1 |
| 2001-07-01 | 0.5 |
| 2001-10-01 | 0.2 |
| 2002-01-01 | 1.3 |
| 2002-04-01 | 1.3 |
| 2002-07-01 | 2.2 |
| 2002-10-01 | 2.1 |
| 2003-01-01 | 1.8 |
| 2003-04-01 | 2.0 |
| 2003-07-01 | 3.3 |
| 2003-10-01 | 4.3 |
| 2004-01-01 | 4.3 |
| 2004-04-01 | 4.2 |
| 2004-07-01 | 3.4 |
| 2004-10-01 | 3.3 |
| 2005-01-01 | 3.9 |
| 2005-04-01 | 3.6 |
| 2005-07-01 | 3.5 |
| 2005-10-01 | 3.1 |
| 2006-01-01 | 3.4 |
| 2006-04-01 | 3.1 |
| 2006-07-01 | 2.4 |
| 2006-10-01 | 2.6 |
| 2007-01-01 | 1.5 |
| 2007-04-01 | 1.8 |
| 2007-07-01 | 2.2 |
| 2007-10-01 | 2.0 |
| 2008-01-01 | 1.1 |
| 2008-04-01 | 1.1 |
| 2008-07-01 | 0.0 |
| 2008-10-01 | -2.8 |
| 2009-01-01 | -3.3 |
| 2009-04-01 | -3.9 |
| 2009-07-01 | -3.0 |
| 2009-10-01 | 0.2 |
| 2010-01-01 | 1.7 |
| 2010-04-01 | 2.8 |
| 2010-07-01 | 3.2 |
| 2010-10-01 | 2.6 |
| 2011-01-01 | 1.9 |
| 2011-04-01 | 1.7 |
| 2011-07-01 | 0.9 |
| 2011-10-01 | 1.6 |
| 2012-01-01 | 2.7 |
| 2012-04-01 | 2.4 |
| 2012-07-01 | 2.5 |
| 2012-10-01 | 1.5 |
| 2013-01-01 | 1.6 |
| 2013-04-01 | 1.3 |
| 2013-07-01 | 1.9 |
| 2013-10-01 | 2.6 |
| 2014-01-01 | 1.4 |
| 2014-04-01 | 2.7 |
| 2014-07-01 | 3.1 |
| 2014-10-01 | 2.9 |
| 2015-01-01 | 4.0 |
| 2015-04-01 | 3.3 |
| 2015-07-01 | 2.4 |
| 2015-10-01 | 1.9 |
| 2016-01-01 | 1.6 |
| 2016-04-01 | 1.3 |
| 2016-07-01 | 1.6 |
| 2016-10-01 | 2.0 |
| 2017-01-01 | 2.1 |
| 2017-04-01 | 2.2 |
| 2017-07-01 | 2.4 |
| 2017-10-01 | 2.8 |
| 2018-01-01 | 2.9 |
c)
To determine
The graphical representation of quarterly growth rates of real GDP from 1960 to last year using the percent change from preceding period quarterly. To ascertain the least volatile and most volatile measure, and the differences between these three series.
c)
Expert Solution
Explanation of Solution
The data of quarterly growth rates of real GDP from 1960 to last year using the percent change from preceding period quarterly is as follows:
| Date | GDP percent change from preceding period, quarterly |
| 1960-04-01 | -2.1 |
| 1960-07-01 | 2.0 |
| 1960-10-01 | -5.0 |
| 1961-01-01 | 2.7 |
| 1961-04-01 | 7.0 |
| 1961-07-01 | 7.9 |
| 1961-10-01 | 8.1 |
| 1962-01-01 | 7.3 |
| 1962-04-01 | 3.7 |
| 1962-07-01 | 5.0 |
| 1962-10-01 | 1.3 |
| 1963-01-01 | 4.4 |
| 1963-04-01 | 4.6 |
| 1963-07-01 | 9.1 |
| 1963-10-01 | 2.6 |
| 1964-01-01 | 8.7 |
| 1964-04-01 | 4.4 |
| 1964-07-01 | 6.4 |
| 1964-10-01 | 1.2 |
| 1965-01-01 | 10.0 |
| 1965-04-01 | 5.1 |
| 1965-07-01 | 9.2 |
| 1965-10-01 | 9.5 |
| 1966-01-01 | 10.1 |
| 1966-04-01 | 1.4 |
| 1966-07-01 | 3.4 |
| 1966-10-01 | 3.3 |
| 1967-01-01 | 3.6 |
| 1967-04-01 | 0.2 |
| 1967-07-01 | 3.8 |
| 1967-10-01 | 3.0 |
| 1968-01-01 | 8.4 |
| 1968-04-01 | 6.9 |
| 1968-07-01 | 3.1 |
| 1968-10-01 | 1.6 |
| 1969-01-01 | 6.4 |
| 1969-04-01 | 1.2 |
| 1969-07-01 | 2.7 |
| 1969-10-01 | -1.9 |
| 1970-01-01 | -0.6 |
| 1970-04-01 | 0.6 |
| 1970-07-01 | 3.7 |
| 1970-10-01 | -4.2 |
| 1971-01-01 | 11.3 |
| 1971-04-01 | 2.2 |
| 1971-07-01 | 3.3 |
| 1971-10-01 | 0.9 |
| 1972-01-01 | 7.6 |
| 1972-04-01 | 9.4 |
| 1972-07-01 | 3.8 |
| 1972-10-01 | 6.9 |
| 1973-01-01 | 10.3 |
| 1973-04-01 | 4.4 |
| 1973-07-01 | -2.1 |
| 1973-10-01 | 3.8 |
| 1974-01-01 | -3.4 |
| 1974-04-01 | 1.0 |
| 1974-07-01 | -3.7 |
| 1974-10-01 | -1.5 |
| 1975-01-01 | -4.8 |
| 1975-04-01 | 2.9 |
| 1975-07-01 | 7.0 |
| 1975-10-01 | 5.5 |
| 1976-01-01 | 9.3 |
| 1976-04-01 | 3.0 |
| 1976-07-01 | 2.2 |
| 1976-10-01 | 2.9 |
| 1977-01-01 | 4.8 |
| 1977-04-01 | 8.0 |
| 1977-07-01 | 7.4 |
| 1977-10-01 | 0.0 |
| 1978-01-01 | 1.3 |
| 1978-04-01 | 16.4 |
| 1978-07-01 | 4.1 |
| 1978-10-01 | 5.5 |
| 1979-01-01 | 0.7 |
| 1979-04-01 | 0.4 |
| 1979-07-01 | 3.0 |
| 1979-10-01 | 1.0 |
| 1980-01-01 | 1.3 |
| 1980-04-01 | -8.0 |
| 1980-07-01 | -0.5 |
| 1980-10-01 | 7.7 |
| 1981-01-01 | 8.1 |
| 1981-04-01 | -2.9 |
| 1981-07-01 | 4.9 |
| 1981-10-01 | -4.3 |
| 1982-01-01 | -6.1 |
| 1982-04-01 | 1.8 |
| 1982-07-01 | -1.5 |
| 1982-10-01 | 0.2 |
| 1983-01-01 | 5.4 |
| 1983-04-01 | 9.4 |
| 1983-07-01 | 8.2 |
| 1983-10-01 | 8.6 |
| 1984-01-01 | 8.1 |
| 1984-04-01 | 7.1 |
| 1984-07-01 | 3.9 |
| 1984-10-01 | 3.3 |
| 1985-01-01 | 3.9 |
| 1985-04-01 | 3.6 |
| 1985-07-01 | 6.2 |
| 1985-10-01 | 3.0 |
| 1986-01-01 | 3.8 |
| 1986-04-01 | 1.8 |
| 1986-07-01 | 3.9 |
| 1986-10-01 | 2.2 |
| 1987-01-01 | 3.0 |
| 1987-04-01 | 4.4 |
| 1987-07-01 | 3.5 |
| 1987-10-01 | 7.0 |
| 1988-01-01 | 2.1 |
| 1988-04-01 | 5.4 |
| 1988-07-01 | 2.4 |
| 1988-10-01 | 5.4 |
| 1989-01-01 | 4.1 |
| 1989-04-01 | 3.1 |
| 1989-07-01 | 3.0 |
| 1989-10-01 | 0.8 |
| 1990-01-01 | 4.4 |
| 1990-04-01 | 1.5 |
| 1990-07-01 | 0.3 |
| 1990-10-01 | -3.6 |
| 1991-01-01 | -1.9 |
| 1991-04-01 | 3.2 |
| 1991-07-01 | 2.0 |
| 1991-10-01 | 1.4 |
| 1992-01-01 | 4.9 |
| 1992-04-01 | 4.4 |
| 1992-07-01 | 4.0 |
| 1992-10-01 | 4.2 |
| 1993-01-01 | 0.7 |
| 1993-04-01 | 2.3 |
| 1993-07-01 | 1.9 |
| 1993-10-01 | 5.6 |
| 1994-01-01 | 3.9 |
| 1994-04-01 | 5.5 |
| 1994-07-01 | 2.4 |
| 1994-10-01 | 4.7 |
| 1995-01-01 | 1.4 |
| 1995-04-01 | 1.2 |
| 1995-07-01 | 3.5 |
| 1995-10-01 | 2.7 |
| 1996-01-01 | 3.0 |
| 1996-04-01 | 6.8 |
| 1996-07-01 | 3.6 |
| 1996-10-01 | 4.2 |
| 1997-01-01 | 2.6 |
| 1997-04-01 | 6.8 |
| 1997-07-01 | 5.1 |
| 1997-10-01 | 3.5 |
| 1998-01-01 | 4.1 |
| 1998-04-01 | 3.8 |
| 1998-07-01 | 5.1 |
| 1998-10-01 | 6.6 |
| 1999-01-01 | 3.8 |
| 1999-04-01 | 3.1 |
| 1999-07-01 | 5.3 |
| 1999-10-01 | 7.0 |
| 2000-01-01 | 1.5 |
| 2000-04-01 | 7.5 |
| 2000-07-01 | 0.5 |
| 2000-10-01 | 2.5 |
| 2001-01-01 | -1.1 |
| 2001-04-01 | 2.4 |
| 2001-07-01 | -1.7 |
| 2001-10-01 | 1.1 |
| 2002-01-01 | 3.5 |
| 2002-04-01 | 2.4 |
| 2002-07-01 | 1.8 |
| 2002-10-01 | 0.6 |
| 2003-01-01 | 2.2 |
| 2003-04-01 | 3.5 |
| 2003-07-01 | 7.0 |
| 2003-10-01 | 4.7 |
| 2004-01-01 | 2.2 |
| 2004-04-01 | 3.1 |
| 2004-07-01 | 3.8 |
| 2004-10-01 | 4.1 |
| 2005-01-01 | 4.5 |
| 2005-04-01 | 1.9 |
| 2005-07-01 | 3.6 |
| 2005-10-01 | 2.6 |
| 2006-01-01 | 5.4 |
| 2006-04-01 | 0.9 |
| 2006-07-01 | 0.6 |
| 2006-10-01 | 3.5 |
| 2007-01-01 | 0.9 |
| 2007-04-01 | 2.3 |
| 2007-07-01 | 2.2 |
| 2007-10-01 | 2.5 |
| 2008-01-01 | -2.3 |
| 2008-04-01 | 2.1 |
| 2008-07-01 | -2.1 |
| 2008-10-01 | -8.4 |
| 2009-01-01 | -4.4 |
| 2009-04-01 | -0.6 |
| 2009-07-01 | 1.5 |
| 2009-10-01 | 4.5 |
| 2010-01-01 | 1.5 |
| 2010-04-01 | 3.7 |
| 2010-07-01 | 3.0 |
| 2010-10-01 | 2.0 |
| 2011-01-01 | -1.0 |
| 2011-04-01 | 2.9 |
| 2011-07-01 | -0.1 |
| 2011-10-01 | 4.7 |
| 2012-01-01 | 3.2 |
| 2012-04-01 | 1.7 |
| 2012-07-01 | 0.5 |
| 2012-10-01 | 0.5 |
| 2013-01-01 | 3.6 |
| 2013-04-01 | 0.5 |
| 2013-07-01 | 3.2 |
| 2013-10-01 | 3.2 |
| 2014-01-01 | -1.1 |
| 2014-04-01 | 5.5 |
| 2014-07-01 | 5.0 |
| 2014-10-01 | 2.3 |
| 2015-01-01 | 3.2 |
| 2015-04-01 | 3.0 |
| 2015-07-01 | 1.3 |
| 2015-10-01 | 0.1 |
| 2016-01-01 | 2.0 |
| 2016-04-01 | 1.9 |
| 2016-07-01 | 2.2 |
| 2016-10-01 | 2.0 |
| 2017-01-01 | 2.3 |
| 2017-04-01 | 2.2 |
| 2017-07-01 | 3.2 |
| 2017-10-01 | 3.5 |
| 2018-01-01 | 2.5 |
| 2018-04-01 | 3.5 |
The graphical representation of the quarterly growth rates of real GDP from 1960 to 2018 using the percent change from the previous quarter is as follows:
The quarterly percent change at the annual rate indicates the percent change, if the quarterly rate goes on for four quarters. It is calculated by compounding of quarterly rate for four quarters.
For some unpredictable quarterly series, percentage changes at quarterly rates rather than at annual rates are preferred because the question of comparability is less relevant and because the annual rate of change is smaller.
When these three data and their respective graph compare to each other for some specific successive period of time, following result is determined:
- 2nd one that is, GDP growth rate using percentage change from quarter one year ago is most volatile and 3rd way that is, GDP growth rate by using percent change from preceding period quarterly is least volatile.
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- Evaluate the effectiveness of supply and demand models in predicting labor market outcomes. Justify your assessment with specific examples from real-world labor markets.arrow_forwardExplain the difference between Microeconomics and Macroeconomics? 2.) Explain what fiscal policy is and then explain what Monetary Policy is? 3.) Why is opportunity cost and give one example from your own of opportunity cost. 4.) What are models and what model did we already discuss in class? 5.) What is meant by scarcity of resources?arrow_forward2. What is the payoff from a long futures position where you are obligated to buy at the contract price? What is the payoff from a short futures position where you are obligated to sell at the contract price?? Draw the payoff diagram for each position. Payoff from Futures Contract F=$50.85 S1 Long $100 $95 $90 $85 $80 $75 $70 $65 $60 $55 $50.85 $50 $45 $40 $35 $30 $25 Shortarrow_forward
- 3. Consider a call on the same underlier (Cisco). The strike is $50.85, which is the forward price. The owner of the call has the choice or option to buy at the strike. They get to see the market price S1 before they decide. We assume they are rational. What is the payoff from owning (also known as being long) the call? What is the payoff from selling (also known as being short) the call? Payoff from Call with Strike of k=$50.85 S1 Long $100 $95 $90 $85 $80 $75 $70 $65 $60 $55 $50.85 $50 $45 $40 $35 $30 $25 Shortarrow_forward4. Consider a put on the same underlier (Cisco). The strike is $50.85, which is the forward price. The owner of the call has the choice or option to buy at the strike. They get to see the market price S1 before they decide. We assume they are rational. What is the payoff from owning (also known as being long) the put? What is the payoff from selling (also known as being short) the put? Payoff from Put with Strike of k=$50.85 S1 Long $100 $95 $90 $85 $80 $75 $70 $65 $60 $55 $50.85 $50 $45 $40 $35 $30 $25 Shortarrow_forwardThe following table provides information on two technology companies, IBM and Cisco. Use the data to answer the following questions. Company IBM Cisco Systems Stock Price Dividend (trailing 12 months) $150.00 $50.00 $7.00 Dividend (next 12 months) $7.35 Dividend Growth 5.0% $2.00 $2.15 7.5% 1. You buy a futures contract instead of purchasing Cisco stock at $50. What is the one-year futures price, assuming the risk-free interest rate is 6%? Remember to adjust the futures price for the dividend of $2.15.arrow_forward
- 5. Consider a one-year European-style call option on Cisco stock. The strike is $50.85, which is the forward price. The risk-free interest rate is 6%. Assume the stock price either doubles or halves each period. The price movement corresponds to u = 2 and d = ½ = 1/u. S1 = $100 Call payoff= SO = $50 S1 = $25 Call payoff= What is the call payoff for $1 = $100? What is the call payoff for S1 = $25?arrow_forwardMC The diagram shows a pharmaceutical firm's demand curve and marginal cost curve for a new heart medication for which the firm holds a 20-year patent on its production. Assume this pharmaceutical firm charges a single price for its drug. At its profit-maximizing level of output, it will generate a total profit represented by OA. areas J+K. B. areas F+I+H+G+J+K OC. areas E+F+I+H+G. D. - it is not possible to determine with the informatio OE. the sum of areas A through K. (...) Po P1 Price F P2 E H 0 G B Q MR D ōarrow_forwardPrice Quantity $26 0 The marketing department of $24 20,000 Johnny Rockabilly's record company $22 40,000 has determined that the demand for his $20 60,000 latest CD is given in the table at right. $18 80,000 $16 100,000 $14 120,000 The record company's costs consist of a $240,000 fixed cost of recording the CD, an $8 per CD variable cost of producing and distributing the CD, plus the cost of paying Johnny for his creative talent. The company is considering two plans for paying Johnny. Plan 1: Johnny receives a zero fixed recording fee and a $4 per CD royalty for each CD that is sold. Plan 2: Johnny receives a $400,000 fixed recording fee and zero royalty per CD sold. Under either plan, the record company will choose the price of Johnny's CD so as to maximize its (the record company's) profit. The record company's profit is the revenues minus costs, where the costs include the costs of production, distribution, and the payment made to Johnny. Johnny's payment will be be under plan 2 as…arrow_forward
- Which of the following is the best example of perfect price discrimination? A. Universities give entry scholarships to poorer students. B. Students pay lower prices at the local theatre. ○ C. A hotel charges for its rooms according to the number of days left before the check-in date. ○ D. People who collect the mail coupons get discounts at the local food store. ○ E. An airline offers a discount to students.arrow_forwardConsider the figure at the right. The profit of the single-price monopolist OA. is shown by area D+H+I+F+A. B. is shown by area A+I+F. OC. is shown by area D + H. ○ D. is zero. ○ E. cannot be calculated or shown with just the information given in the graph. (C) Price ($) B C D H FIG шо E MC ATC A MR D = AR Quantityarrow_forwardConsider the figure. A perfectly price-discriminating monopolist will produce ○ A. 162 units and charge a price equal to $69. ○ B. 356 units and charge a price equal to $52 for the last unit sold only. OC. 162 units and charge a price equal to $52. OD. 356 units and charge a price equal to the perfectly competitive price. Dollars per Unit $69 $52 MR 162 356 Output MC Darrow_forward
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