Classify the given items as final good or service or as an intermediate good or service.

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Answer 1

Question

Chapter 21, Problem 1SPA

To determine

Classify the given items as final good or service or as an intermediate good or service.

Expert Solution & Answer

Explanation of Solution

The final goods are those used either for final consumption or for capital formation. On the other hand, the goods that are used in producing the final goods and services are called the intermediate goods.

Airline ticket bought by a student: The airline ticket is used for airline flights. Thus, the airline ticket is an intermediate good. This is part of the consumption expenditure.
New airplanes bought by southwest Airlines: The purchase of a new airplane can be treated as a final good. This is part of the investment expenditure.
Cheese bought by Domino’s: The Domino’s is one of the pizza shops in the market. Therefore, they purchase cheese for preparing pizzas. Thus, it is an intermediate good. This is part of consumption expenditure.
Purchase of a new phone: The purchase of a new phone is a final good. This is part of consumption expenditure.
New house bought by Bill Gates: The purchase of a new house is final good. This is part of an investment expenditure.

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M” method Given the following model, solve by the method of “M”. (see image)

As indicated in the attached image, U.S. earnings for high- and low-skill workers as measured by educational attainment began diverging in the 1980s. The remaining questions in this problem set use the model for the labor market developed in class to walk through potential explanations for this trend. 1. Assume that there are just two types of workers, low- and high-skill. As a result, there are two labor markets: supply and demand for low-skill workers and supply and demand for high-skill workers. Using two carefully drawn labor-market figures, show that an increase in the demand for high skill workers can explain an increase in the relative wage of high-skill workers. 2. Using the same assumptions as in the previous question, use two carefully drawn labor-market figures to show that an increase in the supply of low-skill workers can explain an increase in the relative wage of high-skill workers.

Answer 2

Question

Chapter 21, Problem 1SPA

To determine

Classify the given items as final good or service or as an intermediate good or service.

Expert Solution & Answer

Explanation of Solution

The final goods are those used either for final consumption or for capital formation. On the other hand, the goods that are used in producing the final goods and services are called the intermediate goods.

Airline ticket bought by a student: The airline ticket is used for airline flights. Thus, the airline ticket is an intermediate good. This is part of the consumption expenditure.
New airplanes bought by southwest Airlines: The purchase of a new airplane can be treated as a final good. This is part of the investment expenditure.
Cheese bought by Domino’s: The Domino’s is one of the pizza shops in the market. Therefore, they purchase cheese for preparing pizzas. Thus, it is an intermediate good. This is part of consumption expenditure.
Purchase of a new phone: The purchase of a new phone is a final good. This is part of consumption expenditure.
New house bought by Bill Gates: The purchase of a new house is final good. This is part of an investment expenditure.

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Answer 3

Question

Chapter 21, Problem 1SPA

To determine

Classify the given items as final good or service or as an intermediate good or service.

Expert Solution & Answer

Explanation of Solution

The final goods are those used either for final consumption or for capital formation. On the other hand, the goods that are used in producing the final goods and services are called the intermediate goods.

Airline ticket bought by a student: The airline ticket is used for airline flights. Thus, the airline ticket is an intermediate good. This is part of the consumption expenditure.
New airplanes bought by southwest Airlines: The purchase of a new airplane can be treated as a final good. This is part of the investment expenditure.
Cheese bought by Domino’s: The Domino’s is one of the pizza shops in the market. Therefore, they purchase cheese for preparing pizzas. Thus, it is an intermediate good. This is part of consumption expenditure.
Purchase of a new phone: The purchase of a new phone is a final good. This is part of consumption expenditure.
New house bought by Bill Gates: The purchase of a new house is final good. This is part of an investment expenditure.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 21, Problem 1SPA

To determine

Classify the given items as final good or service or as an intermediate good or service.

Expert Solution & Answer

Explanation of Solution

The final goods are those used either for final consumption or for capital formation. On the other hand, the goods that are used in producing the final goods and services are called the intermediate goods.

Airline ticket bought by a student: The airline ticket is used for airline flights. Thus, the airline ticket is an intermediate good. This is part of the consumption expenditure.
New airplanes bought by southwest Airlines: The purchase of a new airplane can be treated as a final good. This is part of the investment expenditure.
Cheese bought by Domino’s: The Domino’s is one of the pizza shops in the market. Therefore, they purchase cheese for preparing pizzas. Thus, it is an intermediate good. This is part of consumption expenditure.
Purchase of a new phone: The purchase of a new phone is a final good. This is part of consumption expenditure.
New house bought by Bill Gates: The purchase of a new house is final good. This is part of an investment expenditure.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 21, Problem 1SPA

To determine

Classify the given items as final good or service or as an intermediate good or service.

Expert Solution & Answer

Explanation of Solution

The final goods are those used either for final consumption or for capital formation. On the other hand, the goods that are used in producing the final goods and services are called the intermediate goods.

Airline ticket bought by a student: The airline ticket is used for airline flights. Thus, the airline ticket is an intermediate good. This is part of the consumption expenditure.
New airplanes bought by southwest Airlines: The purchase of a new airplane can be treated as a final good. This is part of the investment expenditure.
Cheese bought by Domino’s: The Domino’s is one of the pizza shops in the market. Therefore, they purchase cheese for preparing pizzas. Thus, it is an intermediate good. This is part of consumption expenditure.
Purchase of a new phone: The purchase of a new phone is a final good. This is part of consumption expenditure.
New house bought by Bill Gates: The purchase of a new house is final good. This is part of an investment expenditure.

Answer 6

Chapter 21, Problem 1SPA

To determine

Classify the given items as final good or service or as an intermediate good or service.

Expert Solution & Answer

Explanation of Solution

The final goods are those used either for final consumption or for capital formation. On the other hand, the goods that are used in producing the final goods and services are called the intermediate goods.

Airline ticket bought by a student: The airline ticket is used for airline flights. Thus, the airline ticket is an intermediate good. This is part of the consumption expenditure.
New airplanes bought by southwest Airlines: The purchase of a new airplane can be treated as a final good. This is part of the investment expenditure.
Cheese bought by Domino’s: The Domino’s is one of the pizza shops in the market. Therefore, they purchase cheese for preparing pizzas. Thus, it is an intermediate good. This is part of consumption expenditure.
Purchase of a new phone: The purchase of a new phone is a final good. This is part of consumption expenditure.
New house bought by Bill Gates: The purchase of a new house is final good. This is part of an investment expenditure.

Answer 7

Chapter 21, Problem 1SPA

To determine

Classify the given items as final good or service or as an intermediate good or service.

Answer 8

Expert Solution & Answer

Explanation of Solution

The final goods are those used either for final consumption or for capital formation. On the other hand, the goods that are used in producing the final goods and services are called the intermediate goods.

Airline ticket bought by a student: The airline ticket is used for airline flights. Thus, the airline ticket is an intermediate good. This is part of the consumption expenditure.
New airplanes bought by southwest Airlines: The purchase of a new airplane can be treated as a final good. This is part of the investment expenditure.
Cheese bought by Domino’s: The Domino’s is one of the pizza shops in the market. Therefore, they purchase cheese for preparing pizzas. Thus, it is an intermediate good. This is part of consumption expenditure.
Purchase of a new phone: The purchase of a new phone is a final good. This is part of consumption expenditure.
New house bought by Bill Gates: The purchase of a new house is final good. This is part of an investment expenditure.