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Decent Essays

Economic Question 1: (a) Complete the following table of costs for a firm. (Note: enter the figures in the MC column between outputs of 0 and 1, 1 and 2, 2 and 3, etc.) Output (units) | TC($) | AC($) | MC($) | 0 | 55 | ---- | 30 | 1 | 85 | 85 | | | | | 25 | 2 | 110 | 55 | | | | | 20 | 3 | 130 | 43 | | | | | 30 | 4 | 160 | 40 | | | | | 50 | 5 | 210 | 42 | | | | | 70 | 6 | 280 | 47 | | | | | 90 | 7 | 370 | 53 | | | | | 110 | 8 | 480 | 60 | | | | | 130 | 9 | 610 | 68 | | | | | 150 | 10 | 760 | 76 | | (b) How much is total fixed cost at: (1) an output of 0 units? Answer The “0 units” total fixed cost is 55. (2) an output of 6 units? Answer The “6 units” total fixed …show more content…

(e) Given your answer to (d), and assuming that GDP is currently $650bn, what will happen to GDP? Rise/Fall/Stay the same Answer AE=$665bn, GDP=$650bn When the AE greater than GDP, the investment, GDP, employment will increase, so GDP will increase. Question 5 (a) Describe the relevant criteria that the United States use to determine whether a person is ‘unemployed’ and what problems do you see using this measure? Answer Each month they have a survey of a random sample of households. Each member of the family who is 15 years of age or older is asked whether he or she is employed or unemployed. If a person works at least one hour per week for pay or at least 15 hours per week as an unpaid worker in a family business, that person is counted as employed. If the person is not employed, the question is then whether or not he or she has looked for work in the past month. If they have, the person is said to be unemployed. The type of unemployed have seasonal unemployed, frictional unemployed, structural unemployed, cyclical unemployed. This measure: unemployed rate= unemployed workers/total labor force (b) Why is frictional unemployment inevitable in an economy? Answer Frictional unemployment is usually quite short-term, and is therefore not of great concern from either a public policy or a social welfare perspective. Frictional unemployment is unemployment caused by the normal search time required by people with marketable skills who are

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