PRINCIPLES OF MACROECONOMICS
2nd Edition
ISBN: 9780357129128
Author: OpenStax
Publisher: CENGAGE L
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Textbook Question
Chapter 8, Problem 20RQ
Why is there
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1. After the reopening of borders with mainland China following the COVID-19 lockdown, residents
living near the border now have the option to shop for food on either side. In Hong Kong, the cost
of food is at its listed price, while across the border in mainland China, the price is only half that
of Hong Kong's. A recent report indicates a decline in food sales in Hong Kong post-reopening.
**
Diagrams need not be to scale; Focus on accurately representing the relevant concepts
and relationships rather than the exact proportions.
(a) Using a diagram, explain why Hong Kong's food sales might have dropped after the border
reopening. Assume that consumers are indifferent between purchasing food in Hong Kong or
mainland China, and therefore, their indifference curves have a slope of one like below.
Additionally, consider that there are no transport costs and the daily food budget for consumers
is identical whether they shop in Hong Kong or mainland China. I
3.
14
(b) In response to the…
2. Health Food Company is a well-known global brand that specializes in healthy and organic food
products. One of their main products is organic chicken, which they source from small farmers
in the area. Health Food Company is the sole buyer of organic chicken in the market.
(a) In the context of the organic chicken industry, what type of market structure is Health Food
Company operating in?
(b) Using a diagram, explain how the identified market structure affects the input pricing and
output decisions of Health Food Company. Specifically, include the relevant curves and
any key points such as the profit-maximizing price and quantity. ()
(c) How can encouraging small chicken farmers to form bargaining associations help improve
their trade terms? Explain how this works by drawing on the graph in answer (b) to
illustrate your answer.
2. Suppose that a farmer has two ways to produce his crop. He can use a low-polluting
technology with the marginal cost curve MCL or a high polluting technology with the
marginal cost curve MCH. If the farmer uses the high-polluting technology, for each unit of
quantity produced, one unit of pollution is also produced. Pollution causes pollution
damages that are valued at $E per unit. The good produced can be sold in the market for $P
per unit.
P
1
MCH
0
Q₁
MCL
Q2
E
a.
b.
C.
If there are no restrictions on the firm's choices, which technology will the farmer use and
what quantity will he produce? Explain, referring to the area identified in the figure
Given your response in part a, is it socially efficient for there to be no restriction on
production? Explain, referring to the area identified in the figure
If the government restricts production to Q1, what technology would the farmer choose?
Would a socially efficient outcome be achieved? Explain, referring to the area identified in…
Chapter 8 Solutions
PRINCIPLES OF MACROECONOMICS
Ch. 8 - Suppose the adult population over the age of 16 is...Ch. 8 - Using the above data, what is the unemployment...Ch. 8 - Over the long term, has the U.S. unemployment rate...Ch. 8 - Whose unemployment rates are commonly higher in...Ch. 8 - Beginning in the 1970s and continuing for three...Ch. 8 - Is the increase in labor force participation rates...Ch. 8 - Many college students graduate from college before...Ch. 8 - What is the difference between being unemployed...Ch. 8 - How do you calculate the unemployment rate? How do...Ch. 8 - Are all adults who do not hold jobs counted as...
Ch. 8 - If you an? out of school but working part time,...Ch. 8 - What happens to the unemployment rate when...Ch. 8 - What happens to the labor force participation rate...Ch. 8 - What are some of the problems with using the...Ch. 8 - What criteria do the BLS use to count someone as...Ch. 8 - Assess whether the following would be counted as...Ch. 8 - Are U.S. unemployment rates typically higher,...Ch. 8 - Are U.S. unemployment rates distributed evenly...Ch. 8 - When would you expect cyclical unemployment to be...Ch. 8 - Why is there unemployment in a labor market with...Ch. 8 - Name and explain some of the reasons why wages are...Ch. 8 - What term describes the remaining level of...Ch. 8 - What forces create the natural rate of...Ch. 8 - Would you expect the natural rate of unemployment...Ch. 8 - Would you expect the natural rate of unemployment...Ch. 8 - What is frictional unemployment? Give examples of...Ch. 8 - What is structural unemployment? Give examples of...Ch. 8 - After several years of economic growth, would you...Ch. 8 - What type of unemployment (cyclical, frictional,...Ch. 8 - Using the definition of the unemployment rate, is...Ch. 8 - Is a decrease in the unemployment rate necessarily...Ch. 8 - If many workers become discouraged from looking...Ch. 8 - Would you expect hidden unemployment to be higher,...Ch. 8 - Is the higher unemployment rates for minority...Ch. 8 - While unemployment is highly negatively correlated...Ch. 8 - Why do you think that unemployment rates are lower...Ch. 8 - Do you think it is rational for workers to prefer...Ch. 8 - Under what condition would a decrease in...Ch. 8 - Under what condition would an increase in the...Ch. 8 - As the baby boom generation retires, the ratio of...Ch. 8 - Unemployment rates have been higher in many...Ch. 8 - Is it desirable to pursue a goal of zero...Ch. 8 - Is it desirable to eliminate natural unemployment?...Ch. 8 - The U.S. unemployment rate increased from 4.6 in...Ch. 8 - A country with a population of eight million...Ch. 8 - A government passes a family-friendly law that no...Ch. 8 - As the baby boomer generation retires, what should...
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