2nd Edition

ISBN: 9781947172364

Author: Steven A. Greenlaw; David Shapiro

Publisher: OpenStax

Concept explainers

Productive and Allocative Efficiency Analysis

Productive efficiency, also referred to as production efficiency is a term in economics describing the level at which a company is operating at its maximum capacity. Beyond this point, the entity will be unable to manufacture any additional goods without…

Textbook Question

Chapter 8, Problem 38CTQ

In the argument for why perfect competition is allocatively efficient, the price that people are willing to pay represents the gains to society and the marginal cost to the film represents the costs to society. Can you think of some social costs or issues that are not included in the marginal cost to the firm? Or some social gains that are not included in what people pay for a good?

Expert Solution & Answer

Trending nowThis is a popular solution!

See solution

Check out sample textbook solution

Chapter 8, Problem 37CTQ

Chapter 8, Problem 39P

Students have asked these similar questions

Problem 3 Stata Output Analysis Suppose a study investigates the causal effect of education on wages. Table 1 reports the results of an OLS regression of wages (wage per hour in dollars) on education (years in education). Table 1 Source SS df MS Number of obs = 3,017 F(1, 3015) = 298.39 Model Residual 18904467 191011981 1 18904467 3,015 63353.8909 Prob > F 0.0000 R-squared 0.0901 Adj R-squared 0.0898 Total 209916448 3,016 69600.9444 Root MSE 251.7 wage Coef. Std. Err. t P>|t| [95% Conf. Interval] education cons 29.56644 183.9342 1.711605 23.15976 17.27 0.000 7.94 0.000 26.21041 138.5237 32.92247 229.3447 a. How would you write this relationship using the Core Model? (5 points) b. What is the value for B₁, the coefficient on Education? (2 points) C. What is the standard error of ẞ₁? (2 points) d. What is the R squared for the model? (2 points) e. What is the t statistic for ₁at the 5% level of significance? (2 points) Λ f. What is the 95% confidence interval for B₁? (2 points) Λ g.…

Problem 2 Hypothesis Testing Suppose you are interested in the effect of neighborhood crime incidents on high school graduation rates. You run the following regression model: Graduation; ßo+ß₁Crime; +ɛ¿ = You would like to test whether the neighborhood crime incidents have a statistically significant effect on high school graduation rate at the 5% level of significance (α = 0.05). You estimate the model and find that B₁ = -0.04 and se (B₁) = 0.008. a. Write down the null hypothesis and alternative hypothesis. (4 points) b. Calculate thet statistic of B₁. (5 points) C. What is the critical value of thet statistic for the 5% level of significance? (2 points) d. Calculate the 95% confidence interval for the coefficient on Crime? (6 points) e. Based on your answers to the questions b, c, and d, do you reject or fail to reject the null hypothesis you defined in question a? Justify your answer. (5 points) Λ f. Isẞ₁ statistically significant at the 5% level? (3 points)

Problem 1 Endogeneity & Bias The ACT (an abbreviation of American College Testing) is a standardized test used for college admissions in the United States. Suppose you are interested in whether ACT preparation improves ACT scores. Consider the following model: ACT=B+B Preparation,+e; where Preparation measures the number of hours spent on ACT preparation and ACT is ACT scores. Each student is denoted by the subscript i. Suppose you estimate = - 21 andß₁ = 0.9. a. What is the dependent variable? What is the independent variable? (3 points) b. How do you interpret ẞ = 21 in this context? (4 points) 0 C. How do you interpretß₁ = 0.9 in this context? (4 points) 1 d. Describe a scenario which can cause the independent variable to be endogenous. (4 points)

Chapter 8 Solutions

Principles of Economics 2e

Ch. 8 - Firms ill a perfectly competitive market are said...Ch. 8 - Would independent trucking fit the characteristics...Ch. 8 - Look at Table 8.13. What would happen to the films...Ch. 8 - Suppose that the market price increases to 6, as...Ch. 8 - Explain in words why a profit-maximizing film will...Ch. 8 - A firms marginal cost curve above the average...Ch. 8 - If new technology in a perfectly competitive...Ch. 8 - A market in perfect competition is in long-run...Ch. 8 - Productive efficiency and allocative efficiency...Ch. 8 - Explain how the profit-maximizing rule of setting...

Additional Business Textbook Solutions

Find more solutions based on key concepts

Create an Excel spreadsheet on your own that can make combination forecasts for Problem 18. Create a combinatio...

Operations Management: Processes and Supply Chains (12th Edition) (What's New in Operations Management)

Define cost object and give three examples.

Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)

Basic accounting equation (Learning Objective 5) 10-15 min. Hanson Corp. ? 44,900 + 10,300 Tiny Tots Daycare In...

Financial Accounting, Student Value Edition (5th Edition)

The continuation or terminal value of a project.

Corporate Finance (4th Edition) (Pearson Series in Finance) - Standalone book

FIFO, Perpetual Basis. Spider incorporated provided the following information regarding its inventory for the c...

Intermediate Accounting (2nd Edition)

The weaknesses of payback period method of calculation. Introduction: Every investment requires a time period t...

Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.