PRINCIPLES OF ECONOMICS
14th Edition
ISBN: 2810015433483
Author: OpenStax
Publisher: OpenStax
expand_more
expand_more
format_list_bulleted
Textbook Question
Chapter 20, Problem 35P
Say that the average worker in the U.S. economy is eight times as productive as an average worker in Mexico. If the productivity of U.S. workers grows at
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
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)
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)
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)
Chapter 20 Solutions
PRINCIPLES OF ECONOMICS
Ch. 20 - Explain what the Industrial Revolution was and...Ch. 20 - Explain the difference between property rights and...Ch. 20 - Are there other ways in which we can measure...Ch. 20 - Assume there are two countries: South Korea and...Ch. 20 - What do the growth accounting studies conclude are...Ch. 20 - What policies can the government of a free-market...Ch. 20 - List the areas where government policy can help...Ch. 20 - Use an example to explain why, after periods of...Ch. 20 - Would the following events usually lead to capital...Ch. 20 - What are the advantages of backwardness for...
Ch. 20 - Would you expect capital deepening to result in...Ch. 20 - Why dues productivity growth in high-income...Ch. 20 - How did the Industrial Revolution increase the...Ch. 20 - How much should a nation be concerned if its rate...Ch. 20 - How is GDP per capita calculated differently from...Ch. 20 - How do gains in labor productivity lead to gains...Ch. 20 - What is an aggregate production function?Ch. 20 - What is capital deepening?Ch. 20 - What do economists mean when they refer to...Ch. 20 - For a high-income economy like the United States,...Ch. 20 - List some arguments for and against the likelihood...Ch. 20 - Over the past 50 years, many countries have...Ch. 20 - Labor Productivity and Economic Growth outlined...Ch. 20 - Change in labor productivity is one of the most...Ch. 20 - Refer back to the Work It Out about Comparing the...Ch. 20 - Education seems to be important for human capital...Ch. 20 - Describe some of the political and social...Ch. 20 - Why is investing in girls education beneficial for...Ch. 20 - How is the concept of technology, as defined with...Ch. 20 - What sorts of policies can governments implement...Ch. 20 - As technological change makes us more sedentary...Ch. 20 - An economy starts off with a GDP per capita of...Ch. 20 - An economy starts off with a GDP per capital of...Ch. 20 - Say that the average worker in Canada has a...Ch. 20 - Say that the average worker in the U.S. economy is...
Additional Business Textbook Solutions
Find more solutions based on key concepts
Quick ratio and current ratio (Learning Objective 7) 1520 min. Consider the following data: COMPANY A B C D Cas...
Financial Accounting, Student Value Edition (5th Edition)
Why is the capital-budgeting process so important?
Foundations Of Finance
Sykes Corporations comparative balance sheets at December 31, Year 2 and Year 1, reported accumulated depreciat...
Intermediate Accounting (2nd Edition)
To what does the lifetime value of the customer refer, and how is it calculated?
MARKETING:REAL PEOPLE,REAL CHOICES
A company has the opportunity to take over a redevelopment project in an industrial area of a city. No immediat...
Engineering Economy (17th Edition)
11-13. Discuss how your team is going to identify the existing competitors in your chosen market. Based on the ...
Business Essentials (12th Edition) (What's New in Intro to Business)
Knowledge Booster
Similar questions
- Experiments Research suggests that if students use laptops in class, it can have some effect on student achievement. While laptop usage can help students take lecture notes faster, some argue that the laptops may be a source of distraction for the students. Suppose you are interested in looking at the effect of using laptops in class on the students' final exam scores out of 100. You decide to conduct a randomized control trial where you randomly assign some students at UIC to use a laptop in class and other to not use a laptop in class. (Assume that the classes are in person and not online) a. Which people are a part of the treatment group and which people are a part of the control group? (10 points) b. What regression will you run? Define the variables where required. (10 points)arrow_forwardExperiments Research suggests that if students use laptops in class, it can have some effect on student achievement. While laptop usage can help students take lecture notes faster, some argue that the laptops may be a source of distraction for the students. Suppose you are interested in looking at the effect of using laptops in class on the students' final exam scores out of 100. You decide to conduct a randomized control trial where you randomly assign some students at UIC to use a laptop in class and other to not use a laptop in class. (Assume that the classes are in person and not online) a. Which people are a part of the treatment group and which people are a part of the control group? (10 points) b. What regression will you run? Define the variables where required. (10 points)arrow_forwardDummy variables News reports claim that in the last year television watching has increased. You believe that rising unemployment during Covid may be one of the causes for this. Suppose you are interested in looking at the effect of being unemployed on the hours spent watching Netflix per day. You collect data on 10,000 people from Chicago who are between the age of 20 and 60. You define the dummy variable Unemployed which takes the value 1 for those who are unemployed and 0 for those who are employed. Equation 1: Hours spent watching Netflix₁ = ßo + B₁Unemployed; + ε¿ Following is the output for equation 1: reg hours spent_watching_netflix unemployed Source SS df MS Number of obs 10,000 F(1, 9998) = 14314.03 Model Residual 3539.70065 2472.39364 9,998 1 3539.70065 .247288822 Prob F R-squared == 0.0000 = 0.5888 Total 6012.09429 9,999 . 601269556 Adj R-squared Root MSE = 0.5887 .49728 hours spen~x Coef. Std. Err. t P>|t| [95% Conf. Interval] unemployed cons 1.189908 .0099456 119.64…arrow_forward
- Dummy variables News reports claim that in the last year television watching has increased. You believe that rising unemployment during Covid may be one of the causes for this. Suppose you are interested in looking at the effect of being unemployed on the hours spent watching Netflix per day. You collect data on 10,000 people from Chicago who are between the age of 20 and 60. You define the dummy variable Unemployed which takes the value 1 for those who are unemployed and 0 for those who are employed. Equation 1: Hours spent watching Netflix₁ = ßo + B₁Unemployed; + ε¿ Following is the output for equation 1: reg hours spent_watching_netflix unemployed Source SS df MS Number of obs 10,000 F(1, 9998) = 14314.03 Model Residual 3539.70065 2472.39364 9,998 1 3539.70065 .247288822 Prob F R-squared == 0.0000 = 0.5888 Total 6012.09429 9,999 . 601269556 Adj R-squared Root MSE = 0.5887 .49728 hours spen~x Coef. Std. Err. t P>|t| [95% Conf. Interval] unemployed cons 1.189908 .0099456 119.64…arrow_forward17. The South African government's distributive stance is clear given its prioritisation of social spending, which includes grants and subsidised goods. Discuss the advantages and disadvantages of an in-kind subsidy versus a cash grant. Use a graphical illustration to support your arguments. [15] 18. Redistributive expenditure can take the form of direct cash transfers (grants) and/or in-kind subsidies. With references to the graphs below, discuss the merits of these two transfer types in the presence and absence of a positive externality. [14] 19. Expenditure on education and healthcare have, by far, the biggest redistributive effect in South Africa' by one estimate dropping the Gini-coefficient by 10 percentage points. Discuss the South African government's performance in health and education provision by evaluating both the outputs and outcomes in these areas of service delivery. [15] 20. Define the following concepts and provide an example in each case: tax rate structure, general…arrow_forwardSummarise the case for government intervention in the education marketarrow_forward
- Should Maureen question the family about the history of the home? Can Maureen access public records for proof of repairs?arrow_forward3. Distinguish between a direct democracy and a representative democracy. Use appropriate examples to support your answers. [4] 4. Explain the distinction between outputs and outcomes in social service delivery [2] 5. A R1000 tax payable by all adults could be viewed as both a proportional tax and a regressive tax. Do you agree? Explain. [4] 6. Briefly explain the displacement effect in Peacock and Wiseman's model of government expenditure growth and provide a relevant example of it in the South African context. [5] 7. Explain how unbalanced productivity growth may affect government expenditure and briefly comment on its relevance to South Africa. [5] 8. South Africa has recently proposed an increase in its value-added tax rate to 15%, sparking much controversy. Why is it argued that value-added tax is inequitable and what can be done to correct the inequity? [5] 9. Briefly explain the difference between access to education and the quality of education, and why we should care about the…arrow_forward20. Factors 01 pro B. the technological innovations available to companies. A. the laws that regulate manufacturers. C. the resources used to create output D. the waste left over after goods are produced. 21. Table 1.1 shows the tradeoff between different combinations of missile production and home construction, ceteris paribus. Complete the table by calculating the required opportunity costs for both missiles and houses. Then answer the indicated question(s). Combination Number of houses Opportunity cost of houses in Number of missiles terms of missiles J 0 4 K 10,000 3 L 17,000 2 1 M 21,000 0 N 23,000 Opportunity cost of missiles in terms of houses Tutorials-Principles of Economics m health carearrow_forward
- In a small open economy with a floating exchange rate, the supply of real money balances is fixed and a rise in government spending ______ Group of answer choices Raises the interest rate so that net exports must fall to maintain equilibrium in the goods market. Cannot change the interest rate so that net exports must fall to maintain equilibrium in the goods market. Cannot change the interest rate so income must rise to maintain equilibrium in the money market Raises the interest rate, so that income must rise to maintain equilibrium in the money market.arrow_forwardSuppose a country with a fixed exchange rate decides to implement a devaluation of its currency and commits to maintaining the new fixed parity. This implies (A) ______________ in the demand for its goods and a monetary (B) _______________. Group of answer choices (A) expansion ; (B) contraction (A) contraction ; (B) expansion (A) expansion ; (B) expansion (A) contraction ; (B) contractionarrow_forwardAssume a small open country under fixed exchanges rate and full capital mobility. Prices are fixed in the short run and equilibrium is given initially at point A. An exogenous increase in public spending shifts the IS curve to IS'. Which of the following statements is true? Group of answer choices A new equilibrium is reached at point B. The TR curve will shift down until it passes through point B. A new equilibrium is reached at point C. Point B can only be reached in the absence of capital mobility.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Macroeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506756Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...EconomicsISBN:9781305506725Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Exploring EconomicsEconomicsISBN:9781544336329Author:Robert L. SextonPublisher:SAGE Publications, Inc
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning
Macroeconomics: Private and Public Choice (MindTa...
Economics
ISBN:9781305506756
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...
Economics
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Exploring Economics
Economics
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:SAGE Publications, Inc