MANKIW: PRINCIPLES OF MACROECONOMICS
8th Edition
ISBN: 9781337801782
Author: Mankiw
Publisher: CENGAGE L
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Question
Chapter 20, Problem 2QR
To determine
The aggregate demand , short runs aggregate supply and long run aggregate supply.
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The diagram to the right illustrates a competitive industry
in which there is a negative production externality. If a tax
equal to $20/unit (i.e., a tax equal to the marginal
external cost) is imposed, then the net social benefit will
OA. fall by area A+ C.
OB. rise by area B+C.
OC. fall by area C.
OD. rise by area B.
OE. None of the above.
W
Marginal Benefit, Marginal Cost ($)
50
MCS
MCp
45
35
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25
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Problem 3
Simple Bivariate Regression
Consider the following bivariate regression model:
NAMEUIN
Page 1 of 2
=
Hourly Wages, Bo+B₁Education; + &
where Education measures the years of experience at the job for an individual and
Hourly Wage is the hourly wage in dollars. The subscript i indexes various people. You run
a bivariate OLS regression to estimate Bo and B₁.
Suppose you estimate B = 10 and B
a.
0
= 2
How do you interpret the estimates ßo and ß₁ in this context? (3 points)
1
b. Define the terms "predicted/fitted value" and "residual”. (3 points)
c. Suppose that for some individual, the predicted value of Hourly Wage is $20, and
the residual is 2. What is the actual Hourly wage for the individual? Show your
work. (4 points)
d. Suppose that some individual has 10 years of Education, and his actual hourly wage
is $35. What is the predicted outcome and residual for this individual? Show your
work. (5 points)
Chapter 20 Solutions
MANKIW: PRINCIPLES OF MACROECONOMICS
Ch. 20.1 - Prob. 1QQCh. 20.2 - Prob. 2QQCh. 20.3 - Prob. 3QQCh. 20.4 - Prob. 4QQCh. 20.5 - Prob. 5QQCh. 20 - Prob. 1CQQCh. 20 - Prob. 2CQQCh. 20 - Prob. 3CQQCh. 20 - Prob. 4CQQCh. 20 - Prob. 5CQQ
Ch. 20 - Prob. 6CQQCh. 20 - Prob. 1QRCh. 20 - Prob. 2QRCh. 20 - Prob. 3QRCh. 20 - Prob. 4QRCh. 20 - Prob. 5QRCh. 20 - Prob. 6QRCh. 20 - Prob. 7QRCh. 20 - Prob. 1PACh. 20 - Prob. 2PACh. 20 - Prob. 3PACh. 20 - Prob. 4PACh. 20 - Prob. 5PACh. 20 - Prob. 6PACh. 20 - Prob. 7PACh. 20 - Prob. 8PACh. 20 - Prob. 9PACh. 20 - Prob. 10PA
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