Microeconomics: Principles and Policy (MindTap Course List)
13th Edition
ISBN: 9781305280618
Author: William J. Baumol, Alan S. Blinder
Publisher: Cengage Learning
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Textbook Question
Chapter 4, Problem 4TY
The following table summarizes information about the market for principles of economics textbooks:
| Quantity |
Quantity Supplied per Year | |
| $45 | 4,300 | 300 |
| 55 | 2,300 | 700 |
| 65 | 1,300 | 1,300 |
| 75 | 800 | 2,100 |
| 85 | 650 | 3,100 |
- What is the
market equilibrium price and quantity of textbooks? - To quell outrage over tuition increases, the college places a $55 limit on the price of textbooks. How many textbooks will be sold now?
- While the price limit is still in effect, automated publishing increases the efficiency of textbook production. Show graphically the likely effect of this innovation on the market price and quantity.
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Gordon Dividend Growth Model
I downloaded some data about 3M (ticker MMM).
Company
3M
Ticker
MMM
Dividends Per Share
2017
$4.70
2018
$5.44
2019
$5.76
2020
$5.88
2021
$5.92
2022
$5.96
4. The dividend payment in 2022 was $5.96 per share.
Based on the five-year history, we see that dividends per share grew at a compound annual
growth rate of 4.86%
$5.96 (1/5)
CAGR =
$4.70
− 1 = (1.2681)0.20 − 1 = 1.0486 - 1 = 0.0486 = 4.86%
-
-
What should be the 2023 dividend based on these values?
4. The data set BWGHT.DTA contains data on births to women in the United States. Two variables of
interest are the dependent variable, infant birth weight in ounces (bwght), and an explanatory variable,
average number of cigarettes the mother smoked per day during pregnancy (cigs). The following simple
regression was estimated using data on n=1,388 births:
bwght=119.77 - .514 cigs
(i) What is the predicted birth weight when cigs = 0? What about when cigs=20 (one pack per day)?
Comment on the difference.
(ii) Does this simple regression necessarily capture a causal relationship between the child's birth weight
and the mother's smoking habits? Explain.
(iii) To predict a birth weight of 125 ounces, what would cigs have to be? Comment.
(iv) The proportion of women in the sample who do not smoke while pregnant is about .85. Does this
help reconcile your finding from part (iii)?
Given the demand equation Q
following table (using Excel):
=
1,500 200P, calculate all the numbers necessary to fill in the
Elasticity
P
Q Point Arc
Total
Revenue Revenue
Marginal
$7.00
6.50
6.00
5.50
5.00
4.50
4.00
3.50
3.00
2.50
Chapter 4 Solutions
Microeconomics: Principles and Policy (MindTap Course List)
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