(a) Year 1 Year 2 Quantity Price Quantity Price Oranges 100 $5 150 $5 Pears 100 $3 75 $4 The growth rate of constant-dollar real GDP with Year 1 as base.

Question

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Answer 1

Question

Chapter 5, Problem 3E

To determine

(a)

Year 1 Year 2
Quantity Price Quantity Price
Oranges 100 $5 150 $5
Pears 100 $3 75 $4

The growth rate of constant-dollar real GDP with Year 1 as base.

Expert Solution

Answer to Problem 3E

The growth rate of constant dollar GDP is negative 3.21% with year 1 as the base price.

Explanation of Solution

	Year 1	Year 2	Year 1	Year 2
	Quantity	Price	Quantity	Price	Value of goods with Year 1 as base	Value of goods with Year 1 as base
Oranges	100	$5	150	$5	$500	$750
Pears	100	$3	75	$4	$300	$225
Total					$800	$775

The growth rate of GDP from Year 1to Year 2 is given by:

Growth Rate of GDP = (GDP Year 2 – GDP Year 1)GDP Year 1×100

Growth Rate of GDP = (775 – 800)800×100

Growth Rate of GDP = (25)800×100 = -3.125%

Economics Concept Introduction

Constant dollar real GDP - The nominal GDP adjusted for the inflation which reflects the value of all services and goods produced within the country in a year expressed in base year price.

To determine

(b)

Year 1 Year 2
Quantity Price Quantity Price
Oranges 100 $5 150 $5
Pears 100 $3 75 $4

The growth rate of constant-dollar real GDP with Year 2 as base.

Expert Solution

Answer to Problem 3E

The growth rate of constant dollar GDP with year 2 as base price is 16.67%.

Explanation of Solution

	Year 1	Year 2	Year 1	Year 2
	Quantity	Price	Quantity	Price	Value of goods with Year 2 as base	Value of goods with Year 2 as base
Oranges	100	$5	150	$5	$500	$750
Pears	100	$3	75	$4	$400	$300
Total					$900	$1050

The growth rate of GDP from Year 1to Year 2 is given by

Growth Rate of GDP = (GDP Year 2 – GDP Year 1)GDP Year 1×100

Growth Rate of GDP = (1050 – 900)900×100

Growth Rate of GDP = 150900×100 = 16.67%

Economics Concept Introduction

Constant dollar real GDP - The nominal GDP adjusted for the inflation which reflects the value of all goods and services produced within the country in a year expressed in base year price.

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Problem 3 You are given the following demand for European luxury automobiles: Q=1,000 P-0.5.2/1.6 where P-Price of European luxury cars PA = Price of American luxury cars P, Price of Japanese luxury cars I= Annual income of car buyers Assume that each of the coefficients is statistically significant (i.e., that they passed the t-test). On the basis of the information given, answer the following questions 1. Comment on the degree of substitutability between European and American luxury cars and between European and Japanese luxury cars. Explain some possible reasons for the results in the equation. 2. Comment on the coefficient for the income variable. Is this result what you would expect? Explain. 3. Comment on the coefficient of the European car price variable. Is that what you would expect? Explain.

Problem 2: A manufacturer of computer workstations gathered average monthly sales figures from its 56 branch offices and dealerships across the country and estimated the following demand for its product: Q=+15,000-2.80P+150A+0.3P+0.35Pm+0.2Pc (5,234) (1.29) (175) (0.12) (0.17) (0.13) R²=0.68 SER 786 F=21.25 The variables and their assumed values are P = Price of basic model = 7,000 Q==Quantity A = Advertising expenditures (in thousands) = 52 P = Average price of a personal computer = 4,000 P. Average price of a minicomputer = 15,000 Pe Average price of a leading competitor's workstation = 8,000 1. Compute the elasticities for each variable. On this basis, discuss the relative impact that each variable has on the demand. What implications do these results have for the firm's marketing and pricing policies? 2. Conduct a t-test for the statistical significance of each variable. In each case, state whether a one-tail or two-tail test is required. What difference, if any, does it make to…

Answer 2

Question

Chapter 5, Problem 3E

To determine

(a)

Year 1 Year 2
Quantity Price Quantity Price
Oranges 100 $5 150 $5
Pears 100 $3 75 $4

The growth rate of constant-dollar real GDP with Year 1 as base.

Expert Solution

Answer to Problem 3E

The growth rate of constant dollar GDP is negative 3.21% with year 1 as the base price.

Explanation of Solution

	Year 1	Year 2	Year 1	Year 2
	Quantity	Price	Quantity	Price	Value of goods with Year 1 as base	Value of goods with Year 1 as base
Oranges	100	$5	150	$5	$500	$750
Pears	100	$3	75	$4	$300	$225
Total					$800	$775

The growth rate of GDP from Year 1to Year 2 is given by:

Growth Rate of GDP = (GDP Year 2 – GDP Year 1)GDP Year 1×100

Growth Rate of GDP = (775 – 800)800×100

Growth Rate of GDP = (25)800×100 = -3.125%

Economics Concept Introduction

Constant dollar real GDP - The nominal GDP adjusted for the inflation which reflects the value of all services and goods produced within the country in a year expressed in base year price.

To determine

(b)

Year 1 Year 2
Quantity Price Quantity Price
Oranges 100 $5 150 $5
Pears 100 $3 75 $4

The growth rate of constant-dollar real GDP with Year 2 as base.

Expert Solution

Answer to Problem 3E

The growth rate of constant dollar GDP with year 2 as base price is 16.67%.

Explanation of Solution

	Year 1	Year 2	Year 1	Year 2
	Quantity	Price	Quantity	Price	Value of goods with Year 2 as base	Value of goods with Year 2 as base
Oranges	100	$5	150	$5	$500	$750
Pears	100	$3	75	$4	$400	$300
Total					$900	$1050

The growth rate of GDP from Year 1to Year 2 is given by

Growth Rate of GDP = (GDP Year 2 – GDP Year 1)GDP Year 1×100

Growth Rate of GDP = (1050 – 900)900×100

Growth Rate of GDP = 150900×100 = 16.67%

Economics Concept Introduction

Constant dollar real GDP - The nominal GDP adjusted for the inflation which reflects the value of all goods and services produced within the country in a year expressed in base year price.

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Answer 3

Question

Chapter 5, Problem 3E

To determine

(a)

Year 1 Year 2
Quantity Price Quantity Price
Oranges 100 $5 150 $5
Pears 100 $3 75 $4

The growth rate of constant-dollar real GDP with Year 1 as base.

Expert Solution

Answer to Problem 3E

The growth rate of constant dollar GDP is negative 3.21% with year 1 as the base price.

Explanation of Solution

	Year 1	Year 2	Year 1	Year 2
	Quantity	Price	Quantity	Price	Value of goods with Year 1 as base	Value of goods with Year 1 as base
Oranges	100	$5	150	$5	$500	$750
Pears	100	$3	75	$4	$300	$225
Total					$800	$775

The growth rate of GDP from Year 1to Year 2 is given by:

Growth Rate of GDP = (GDP Year 2 – GDP Year 1)GDP Year 1×100

Growth Rate of GDP = (775 – 800)800×100

Growth Rate of GDP = (25)800×100 = -3.125%

Economics Concept Introduction

Constant dollar real GDP - The nominal GDP adjusted for the inflation which reflects the value of all services and goods produced within the country in a year expressed in base year price.

To determine

(b)

Year 1 Year 2
Quantity Price Quantity Price
Oranges 100 $5 150 $5
Pears 100 $3 75 $4

The growth rate of constant-dollar real GDP with Year 2 as base.

Expert Solution

Answer to Problem 3E

The growth rate of constant dollar GDP with year 2 as base price is 16.67%.

Explanation of Solution

	Year 1	Year 2	Year 1	Year 2
	Quantity	Price	Quantity	Price	Value of goods with Year 2 as base	Value of goods with Year 2 as base
Oranges	100	$5	150	$5	$500	$750
Pears	100	$3	75	$4	$400	$300
Total					$900	$1050

The growth rate of GDP from Year 1to Year 2 is given by

Growth Rate of GDP = (GDP Year 2 – GDP Year 1)GDP Year 1×100

Growth Rate of GDP = (1050 – 900)900×100

Growth Rate of GDP = 150900×100 = 16.67%

Economics Concept Introduction

Constant dollar real GDP - The nominal GDP adjusted for the inflation which reflects the value of all goods and services produced within the country in a year expressed in base year price.

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Answer 4

Question

Chapter 5, Problem 3E

To determine

(a)

Year 1 Year 2
Quantity Price Quantity Price
Oranges 100 $5 150 $5
Pears 100 $3 75 $4

The growth rate of constant-dollar real GDP with Year 1 as base.

Expert Solution

Answer to Problem 3E

The growth rate of constant dollar GDP is negative 3.21% with year 1 as the base price.

Explanation of Solution

	Year 1	Year 2	Year 1	Year 2
	Quantity	Price	Quantity	Price	Value of goods with Year 1 as base	Value of goods with Year 1 as base
Oranges	100	$5	150	$5	$500	$750
Pears	100	$3	75	$4	$300	$225
Total					$800	$775

The growth rate of GDP from Year 1to Year 2 is given by:

Growth Rate of GDP = (GDP Year 2 – GDP Year 1)GDP Year 1×100

Growth Rate of GDP = (775 – 800)800×100

Growth Rate of GDP = (25)800×100 = -3.125%

Economics Concept Introduction

Constant dollar real GDP - The nominal GDP adjusted for the inflation which reflects the value of all services and goods produced within the country in a year expressed in base year price.

To determine

(b)

Year 1 Year 2
Quantity Price Quantity Price
Oranges 100 $5 150 $5
Pears 100 $3 75 $4

The growth rate of constant-dollar real GDP with Year 2 as base.

Expert Solution

Answer to Problem 3E

The growth rate of constant dollar GDP with year 2 as base price is 16.67%.

Explanation of Solution

	Year 1	Year 2	Year 1	Year 2
	Quantity	Price	Quantity	Price	Value of goods with Year 2 as base	Value of goods with Year 2 as base
Oranges	100	$5	150	$5	$500	$750
Pears	100	$3	75	$4	$400	$300
Total					$900	$1050

The growth rate of GDP from Year 1to Year 2 is given by

Growth Rate of GDP = (GDP Year 2 – GDP Year 1)GDP Year 1×100

Growth Rate of GDP = (1050 – 900)900×100

Growth Rate of GDP = 150900×100 = 16.67%

Economics Concept Introduction

Constant dollar real GDP - The nominal GDP adjusted for the inflation which reflects the value of all goods and services produced within the country in a year expressed in base year price.

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

Answer 5

Chapter 5, Problem 3E

To determine

(a)

Year 1 Year 2
Quantity Price Quantity Price
Oranges 100 $5 150 $5
Pears 100 $3 75 $4

The growth rate of constant-dollar real GDP with Year 1 as base.

Expert Solution

Answer to Problem 3E

The growth rate of constant dollar GDP is negative 3.21% with year 1 as the base price.

Explanation of Solution

	Year 1	Year 2	Year 1	Year 2
	Quantity	Price	Quantity	Price	Value of goods with Year 1 as base	Value of goods with Year 1 as base
Oranges	100	$5	150	$5	$500	$750
Pears	100	$3	75	$4	$300	$225
Total					$800	$775

The growth rate of GDP from Year 1to Year 2 is given by:

Growth Rate of GDP = (GDP Year 2 – GDP Year 1)GDP Year 1×100

Growth Rate of GDP = (775 – 800)800×100

Growth Rate of GDP = (25)800×100 = -3.125%

Economics Concept Introduction

Constant dollar real GDP - The nominal GDP adjusted for the inflation which reflects the value of all services and goods produced within the country in a year expressed in base year price.

To determine

(b)

Year 1 Year 2
Quantity Price Quantity Price
Oranges 100 $5 150 $5
Pears 100 $3 75 $4

The growth rate of constant-dollar real GDP with Year 2 as base.

Expert Solution

Answer to Problem 3E

The growth rate of constant dollar GDP with year 2 as base price is 16.67%.

Explanation of Solution

	Year 1	Year 2	Year 1	Year 2
	Quantity	Price	Quantity	Price	Value of goods with Year 2 as base	Value of goods with Year 2 as base
Oranges	100	$5	150	$5	$500	$750
Pears	100	$3	75	$4	$400	$300
Total					$900	$1050

The growth rate of GDP from Year 1to Year 2 is given by

Growth Rate of GDP = (GDP Year 2 – GDP Year 1)GDP Year 1×100

Growth Rate of GDP = (1050 – 900)900×100

Growth Rate of GDP = 150900×100 = 16.67%

Economics Concept Introduction

Constant dollar real GDP - The nominal GDP adjusted for the inflation which reflects the value of all goods and services produced within the country in a year expressed in base year price.

Answer 6

Chapter 5, Problem 3E

To determine

(a)

Year 1 Year 2
Quantity Price Quantity Price
Oranges 100 $5 150 $5
Pears 100 $3 75 $4

The growth rate of constant-dollar real GDP with Year 1 as base.

Expert Solution

Answer to Problem 3E

The growth rate of constant dollar GDP is negative 3.21% with year 1 as the base price.

Explanation of Solution

	Year 1	Year 2	Year 1	Year 2
	Quantity	Price	Quantity	Price	Value of goods with Year 1 as base	Value of goods with Year 1 as base
Oranges	100	$5	150	$5	$500	$750
Pears	100	$3	75	$4	$300	$225
Total					$800	$775

The growth rate of GDP from Year 1to Year 2 is given by:

Growth Rate of GDP = (GDP Year 2 – GDP Year 1)GDP Year 1×100

Growth Rate of GDP = (775 – 800)800×100

Growth Rate of GDP = (25)800×100 = -3.125%

Economics Concept Introduction

Constant dollar real GDP - The nominal GDP adjusted for the inflation which reflects the value of all services and goods produced within the country in a year expressed in base year price.

Answer 7

Chapter 5, Problem 3E

To determine

(a)

Year 1 Year 2
Quantity Price Quantity Price
Oranges 100 $5 150 $5
Pears 100 $3 75 $4

The growth rate of constant-dollar real GDP with Year 1 as base.

Answer 8

Expert Solution

Answer to Problem 3E

The growth rate of constant dollar GDP is negative 3.21% with year 1 as the base price.

Answer 9

Expert Solution

Answer 10

Expert Solution

Answer 11

Expert Solution

Answer 12

Explanation of Solution

	Year 1	Year 2	Year 1	Year 2
	Quantity	Price	Quantity	Price	Value of goods with Year 1 as base	Value of goods with Year 1 as base
Oranges	100	$5	150	$5	$500	$750
Pears	100	$3	75	$4	$300	$225
Total					$800	$775

The growth rate of GDP from Year 1to Year 2 is given by:

Growth Rate of GDP = (GDP Year 2 – GDP Year 1)GDP Year 1×100

Growth Rate of GDP = (775 – 800)800×100

Growth Rate of GDP = (25)800×100 = -3.125%

Answer 13

Economics Concept Introduction

Constant dollar real GDP - The nominal GDP adjusted for the inflation which reflects the value of all services and goods produced within the country in a year expressed in base year price.

Answer 14

To determine

(b)

Year 1 Year 2
Quantity Price Quantity Price
Oranges 100 $5 150 $5
Pears 100 $3 75 $4

The growth rate of constant-dollar real GDP with Year 2 as base.

Expert Solution

Answer to Problem 3E

The growth rate of constant dollar GDP with year 2 as base price is 16.67%.

Explanation of Solution

	Year 1	Year 2	Year 1	Year 2
	Quantity	Price	Quantity	Price	Value of goods with Year 2 as base	Value of goods with Year 2 as base
Oranges	100	$5	150	$5	$500	$750
Pears	100	$3	75	$4	$400	$300
Total					$900	$1050

The growth rate of GDP from Year 1to Year 2 is given by

Growth Rate of GDP = (GDP Year 2 – GDP Year 1)GDP Year 1×100

Growth Rate of GDP = (1050 – 900)900×100

Growth Rate of GDP = 150900×100 = 16.67%

Economics Concept Introduction

Constant dollar real GDP - The nominal GDP adjusted for the inflation which reflects the value of all goods and services produced within the country in a year expressed in base year price.

Answer 15

To determine

(b)

Year 1 Year 2
Quantity Price Quantity Price
Oranges 100 $5 150 $5
Pears 100 $3 75 $4

The growth rate of constant-dollar real GDP with Year 2 as base.

Answer 16

Expert Solution

Answer to Problem 3E

The growth rate of constant dollar GDP with year 2 as base price is 16.67%.

Answer 17

Expert Solution

Answer 18

Expert Solution

Answer 19

Expert Solution

Answer 20

Explanation of Solution

	Year 1	Year 2	Year 1	Year 2
	Quantity	Price	Quantity	Price	Value of goods with Year 2 as base	Value of goods with Year 2 as base
Oranges	100	$5	150	$5	$500	$750
Pears	100	$3	75	$4	$400	$300
Total					$900	$1050

The growth rate of GDP from Year 1to Year 2 is given by

Growth Rate of GDP = (GDP Year 2 – GDP Year 1)GDP Year 1×100

Growth Rate of GDP = (1050 – 900)900×100

Growth Rate of GDP = 150900×100 = 16.67%

Answer 21

Economics Concept Introduction

Constant dollar real GDP - The nominal GDP adjusted for the inflation which reflects the value of all goods and services produced within the country in a year expressed in base year price.

Answer 22

Ch. 5 - Prob. 1E Ch. 5 - Prob. 2E Ch. 5 - Prob. 3E Ch. 5 - Prob. 4E Ch. 5 - Prob. 5E Ch. 5 - Prob. 6E Ch. 5 - Prob. 7E Ch. 5 - Prob. 8E Ch. 5 - Prob. 9E Ch. 5 - Prob. 10E

(a) Year 1 Year 2 Quantity Price Quantity Price Oranges 100 $5 150 $5 Pears 100 $3 75 $4 The growth rate of constant-dollar real GDP with Year 1 as base.

(a) Year 1Year 2QuantityPriceQuantityPriceOranges100$5150$5Pears100$375$4 The growth rate of constant-dollar real GDP with Year 1 as base.

Answer to Problem 3E

Explanation of Solution

(b) Year 1Year 2QuantityPriceQuantityPriceOranges100$5150$5Pears100$375$4 The growth rate of constant-dollar real GDP with Year 2 as base.

Answer to Problem 3E

Explanation of Solution

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Chapter 5 Solutions

(a)

Year 1 Year 2
Quantity Price Quantity Price
Oranges 100 $5 150 $5
Pears 100 $3 75 $4

The growth rate of constant-dollar real GDP with Year 1 as base.

(b)

Year 1 Year 2
Quantity Price Quantity Price
Oranges 100 $5 150 $5
Pears 100 $3 75 $4

The growth rate of constant-dollar real GDP with Year 2 as base.