Economics Today and Tomorrow, Student Edition
1st Edition
ISBN: 9780078747663
Author: McGraw-Hill
Publisher: Glencoe/McGraw-Hill School Pub Co
expand_more
expand_more
format_list_bulleted
Question
Chapter 6, Problem 26AA
(a)
To determine
To analyze: effect of fall in consumer confidence according to the cartoon given in the question.
(a)
Expert Solution
Explanation of Solution
Consumer confidence is an indicator in economics which is used basically to compute the level of confidence of the consumer regarding overall state of economy and their financial situation.
When the consumer confidence falls, they are more reluctant to invest in economic activity due to which the economy slows down and start moving toward recession. According to the cartoon given in the question, due to consumer falling confidence, they are spending less as a result; the economic health is under risk.
(b)
To determine
To analyze: The effect of consumer confidence on the saving rate.
(b)
Expert Solution
Explanation of Solution
Saving rate can be defined as the proportion of overall income left after consumption. Or the portion of income, consumers or households keeps aside instead of consuming.
There is a negative association between the consumer’s confidence and the saving rate. It means that if the consumer’s confidence will be less, they will be unwilling to invest money due to which the savings will rise and vice versa.
(c)
To determine
To analyze: The association between consumer’s confidence and savings.
(c)
Expert Solution
Explanation of Solution
Saving rate can be defined as the proportion of overall income left after consumption. Or the portion of income, consumers or households keeps aside instead of consuming.
Lack of confidence demotivates consumers as they think that they will lose their money or face loss if they try to invest it. So, they save more. Therefore, there is a negative association between the consumer’s confidence and the saving rate.
Chapter 6 Solutions
Economics Today and Tomorrow, Student Edition
Ch. 6.1 - Prob. 1RCh. 6.1 - Prob. 2RCh. 6.1 - Prob. 3RCh. 6.1 - Prob. 4RCh. 6.1 - Prob. 5RCh. 6.1 - Prob. 6RCh. 6.2 - Prob. 1RCh. 6.2 - Prob. 2RCh. 6.2 - Prob. 3RCh. 6.2 - Prob. 4R
Ch. 6.3 - Prob. 1RCh. 6.3 - Prob. 2RCh. 6.3 - Prob. 3RCh. 6.3 - Prob. 4RCh. 6.3 - Prob. 5RCh. 6 - Prob. 1AACh. 6 - Prob. 2AACh. 6 - Prob. 3AACh. 6 - Prob. 4AACh. 6 - Prob. 5AACh. 6 - Prob. 6AACh. 6 - Prob. 7AACh. 6 - Prob. 8AACh. 6 - Prob. 9AACh. 6 - Prob. 10AACh. 6 - Prob. 11AACh. 6 - Prob. 12AACh. 6 - Prob. 13AACh. 6 - Prob. 14AACh. 6 - Prob. 15AACh. 6 - Prob. 16AACh. 6 - Prob. 17AACh. 6 - Prob. 18AACh. 6 - Prob. 19AACh. 6 - Prob. 20AACh. 6 - Prob. 21AACh. 6 - Prob. 22AACh. 6 - Prob. 23AACh. 6 - Prob. 24AACh. 6 - Prob. 25AACh. 6 - Prob. 26AA
Additional Business Textbook Solutions
Find more solutions based on key concepts
To what does the lifetime value of the customer refer, and how is it calculated?
MARKETING:REAL PEOPLE,REAL CHOICES
Quick ratio (Learning Objective 7) 510 min. Calculate the quick assets and the quick ratio for each of the foll...
Financial Accounting, Student Value Edition (5th Edition)
15-18 Societal moral issue: Although enforcement of worker safety in Bangladesh is clearly lax, government offi...
Fundamentals of Management (10th Edition)
E2-13 Identifying increases and decreases in accounts and normal balances
Learning Objective 2
Insert the mis...
Horngren's Accounting (12th Edition)
Questions For Review
12-4. How is the concept of the value package useful in marketing to consumers and industr...
Business Essentials (12th Edition) (What's New in Intro to Business)
Risk Premiums and Discount Rates. Top hedge fund manager Sally Buffit believes that a stock with the same marke...
FUNDAMENTALS OF CORPORATE FINANCE
Knowledge Booster
Similar questions
- Consider a call option on a stock that does not pay dividends. The stock price is $100 per share, and the risk-free interest rate is 10%. The call strike is $100 (at the money). The stock moves randomly with u=2 and d=0.5. 1. Write the system of equations to replicate the option using A shares and B bonds. 2. Solve the system of equations and determine the number of shares and the number of bonds needed to replicate the option. Show your answer with 4 decimal places (x.xxxx); do not round intermediate calculations. This is easy to do in Excel. A = B = 3. Use A shares and B bonds from the prior question to calculate the premium on the option. Again, do not round intermediate calculations and show your answer with 4 decimal places. Call premium =arrow_forwardAnswer these questions using replication or the risk neutral probability. Both methods will produce the same answer. Show your work to receive credit. 6. What is the premium of a call with a higher strike. Show your work to receive credit; do not round intermediate calculations. S0 = $100, u=2, d=0.5, r=10%, strike=$150arrow_forwardAnswer these questions using replication or the risk neutral probability. Both methods will produce the same answer.arrow_forward
- Problem 2: At a raffle, 2000 tickets are sold at $5 each for five prizes of $2000, $1000, $500, $250, and $100. You buy one ticket. What is the expected value of your gain? 1. Find the gain for each prize. 2. Write a probability distribution for the possible gains. 3. Find the expected value. 4. Interpret the results.arrow_forwardThis activity focuses on developing direct and supported opinions using various sources of information on the importance of the following topics: non-renewable and renewable energies, economic factors and obstacles that can affect the relationship between international trade and economic growth, devaluation of the currency in countries, and the imbalance of economic equity. In this context, it is essential that, when studying and developing these topics, students understand the concepts of the value of currencies and that leads to devaluation, non-renewable and renewable energy resources, economic development and obstacles, distribution of wealth, economic growth and external and internal constraints, and about international trade as a growth factor. Thus, the objectives that are intended to be achieved are the following: Acquire knowledge about the concepts mentioned above. Determine relationships between economic growth and international trade. Understand what some limitations that…arrow_forwardConsider a firm facing conventional production technology. The short run Production Function has a small range of increasing marginal product (increasing marginal returns) and then is subject to the Law of Diminishing Marginal Product (diminishing marginal returns). A. Putting quantity on the horizontal axis and dollars on the vertical axis, depict three important curves: Fixed Cost (FC), Variable Cost (VC), and Total Cost (TC). (Note that we are not asking you to depict average cost functions!) B. Please clearly indicate on this graph the range of quantities where the firm is experiencing (1) increasing marginal product and (2) diminishing marginal product. C. In a few sentences, please justify why you've made this specific classification of increasing/diminishing marginal product in part (b).arrow_forward
- please answer the following questions: What is money, and why does anyone want it? Explain the concept of the opportunity cost of holding money . Explain why an increase in U.S. interest rates relative to UK interest rates would affect the U.S.-UK exchange rate. Suppose that a person’s wealth is $50,000 and that her yearlyincome is $60,000. Also suppose that her money demand functionis given by Md = $Y10.35 - i2Derive the demand for bonds. Suppose the interest rate increases by 10 percentage points. What is the effect on her demand for bonds?b. What are the effects of an increase in income on her demand for money and her demand for bonds? Explain in wordsarrow_forwardDriving Quiz X My Course G city place w x D2L Login - Univ X D2L Login - Univ x D2L Login - U acmillanlearning.com/ihub/assessment/f188d950-dd73-11e0-9572-0800200c9a66/4db68a5e-69bb-4767-8d6c-a12d +1687 pts /1800 © Macmillan Learning Question 6 of 18 > The graph shows the average total cost (ATC) curve, the marginal cost (MC) curve, the average variable cost (AVC) curve, and the marginal revenue (MR) curve (which is also the market price) for a perfectly competitive firm that produces terrible towels. Answer the three questions, assuming that the firm is profit-maximizing and does not shut down in the short run. What is the firm's total revenue? S What is the firm's total cost? $ What is the firm's profit? (Enter a negative number for a loss.) $ Price $320 $300 $200 $150 205 260 336 365 Quantity MC ATC AVC MR=Parrow_forward1. Suppose that the two nations face the following benefits of pollution, B, and costs of abatement, C: BN = 10, Bs = 7; CN = 5, Cs = 4. Further assume that if the nation chooses to abate pollution, it still receives the benefits of pollution but now must pay the cost of abatement as well. a. Identify the payoffs that accrue to each nation under the four different possible outcomes of the game and present these payoffs in the normal form of the game. b. Recall that the term dominant strategy defines the condition that a player in a game would prefer to play that strategy (in this case either pollute or abate) regardless of the strategy chosen by the other player in the game. Does either nation have a dominant strategy in this game? If so, what is it? c. Identify the Nash equilibria, or non-cooperative equilibria, of this game.arrow_forward
- agrody calming Inted 001 and me 2. A homeowner is concerned about the various air pollutants (e.g., benzene and methane) released in her house when she cooks with natural gas. She is considering replacing her gas oven and stove with an electric stove comprising an induction cooktop and convection oven. The new appliance costs $900 to purchase and install. Capping the old gas line costs an additional $150 (a one-time fee). The old line must be inspected for leaks each year after capping, at a cost of $35 for each inspection. a. If the homeowner plans to remain in the house for four more years and the discount rate is 4%, what is the minimum present value of the benefits that the homeowner would need to experience for this purchase to be justified based on its private net sub present value? b. While trying to understand how she might express the value of reduced exposure to indoor air pollutants in dollar terms, the homeowner consulted the EPA website and found estimates provided by…arrow_forwardAfter the ban is imposed, Joe’s firm switches to the more expensive biodegradable disposable cups. This increases the cost associated with each cup of coffee it produces. Which cost curve(s) will be impacted by the use of the more expensive biodegradable disposable cups? Why? Which cost curve(s) will not shift, and why not? Please use the table below to answer this question. For the second column (“Impacted? If so, how?”), please use one of the following three choices: No shift; Shifts up (i.e., increases: at nearly any given quantity, the cost goes up); or Shifts down (i.e., decreases: at nearly any given quantity, the cost goes down). $ Cost Curve Impacted? If so, how? Explanation of the Shift: Why or Why Not AFC No shift. Fix costs stay the same, regardless of quantity. Fixed cost is calculated as Fixed Cost/Quantity. Since fixed costs remain unchanged, AFC stays the same for each quantity. MC Shifts up. Since the biodegradable cups are more expensive, the…arrow_forwardStyrofoam is non-biodegradable and is not easily recyclable. Many cities and at least one state have enacted laws that ban the use of polystyrene containers. These locales understand that banning these containers will force many businesses to turn to other more expensive forms of packaging and cups, but argue the ban is environmentally important. Shane owns a firm with a conventional production function resulting in U-shaped ATC, AVC, and MC curves. Shane's business sells takeout food and drinks that are currently packaged in styrofoam containers and cups. Graph the short-run AFC0, AVC0, ATC0, and MC0 curves for Shane's firm before the ban on using styrofoam containers.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSON
Engineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education