Cotton is grown in Alabama and sold to a company that makes thread for $5,000. The company that makes thread, turns the raw cotton into thread and sells it to a company that makes cloth for $8,500. The company that makes cloth turns the thread into cloth and sells it to an overseas company that turns the cloth into t-shirts for $11,000. The overseas company makes the T-shirts from the cloth and sells it to a US retailer for $15,500. Finally, the US retailer sells the t-shirts to customers for $25,000. Referring to the scenario above, the US Retailer adds $_________ to GDP.

Cotton is grown in Alabama and sold to a company that makes thread for $5,000. The company that makes thread, turns the raw cotton into thread and sells it to a company that makes cloth for $8,500. The company that makes cloth turns the thread into cloth and sells it to an overseas company that turns the cloth into t-shirts for $11,000. The overseas company makes the T-shirts from the cloth and sells it to a US retailer for $15,500. Finally, the US retailer sells the t-shirts to customers for $25,000. Referring to the scenario above, the US Retailer adds $_________ to GDP.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter5: Investment Decisions: Look Ahead And Reason Back

Section: Chapter Questions

Problem 5.5IP

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Cotton is grown in Alabama and sold to a company that makes thread for $5,000. The company that makes thread, turns the raw cotton into thread and sells it to a company that makes cloth for $8,500. The company that makes cloth turns the thread into cloth and sells it to an overseas company that turns the cloth into t-shirts for $11,000. The overseas company makes the T-shirts from the cloth and sells it to a US retailer for $15,500. Finally, the US retailer sells the t-shirts to customers for $25,000. Referring to the scenario above, the amount added to US GDP from these transactions is $___________.
Sonya used to earn $25,000 a year selling real estate, but she now sells greeting cards. The return to entrepreneurship in the greeting cards industry is $14,000 a year. Over the year, Sonya bought $10,000 worth of cards from manufacturers and sold them for $58,000. Sonya rents a shop for $5,000 a year and spends $1,000 on utilities and office expenses. Sonya owns a cash register, which she bought for $2,000 with funds from her savings account. Her bank pays 3 percent a year on savings accounts. At the end of the year, Sonya was offered $1,600 for her cash register. Calculate Sonya’s explicit costs, implicit costs, and economic profit. Use the following information to work Problems 2 to 4. Yolanda runs a bullfrog farm. When she employs 1 person, she produces 1,000 bullfrogs a week. When she hires a second worker, her total product doubles. Her total product doubles again when she hires a third worker. When she hires a fourth worker, her total product increases but by only 1,000…
In 2016, X Company produced $100,000 worth of synthetic silk. In the same year, X Company sold $1,000 of this silk directly to consumers, via its online outlet. X Company also sold $50,000 of the fabric to Y Company. Y Company used the fabric in 2016 to produce $85,000 worth of designer swimwear. X Company sold the remaining silk in 2017 to Z Company, where it was all used to produce a single fabulous $300,000 Say-Yes-to-the-Dress-type gown. Under the Spending Approach, how much did all of this economic activity contribute to 2016's GDP? a) $100,000 in silk, $35,000 in swimwear, $0 in bridal gowns b) $50,000 in silk, $85,000 in swimwear, $300,000 in bridal gowns c) $1,000 in silk, $35,000 in swimwear, $251,000 in bridal gowns d) $1,000 in silk, $85,000 in swimwear, $300,000 in bridal gowns e) $50,000 in silk, $85,000 in swimwear, $0 in bridal gowns f) $50,000 in silk, $35,000 in swimwear, $0 in bridal gowns
The United States is increasingly outsourcing jobs to India: having the work done in India rather than in the United States. For example, the Indian firm Tata Consultancy Services, which provides information technology services, increased its work force by 70,000 workers in 2010 and expected to add 60,000 more in 2011 (“Outsourcing Firm Hiring 60,000 Workers in India,” San Francisco Chronicle, June 16, 2011). As a result of increased outsourcing, wages of some groups of Indian skilled workers have in-creased substantially over the years. Use a supply-and- demand diagram to explain this outcome.
Akeley is a student working toward a bachelor’s degree in finance. In order to gain some work experience and increase her marketability, she has accepted a summer internship in the finance department at a pharmaceutical company. She is quite pleased with the pay: GH¢15 an hour is more than other students in her cohort receive for their summer internships. At work she meets Joshua, a recent graduate working as a middle manager in the same finance department. Joshua makes GH¢30 an hour and is dissatisfied. Specifically, he tells Akeley that, compared to managers at other pharmaceutical companies, he makes much less. “It isn’t fair,” he complains. “I work just as hard as they do, yet I don’t make as much. Maybe I should go work for the competition.” Required: What is organizational justic Using the analogy above, explain which type of organizational justice is exhibited.
Farmer Jack is a well-established farmer who owns two plots of land. He refers to his fields of land by names. One field/plot of land is called Gator Plot, and the other one is called Brown Plot. As a farmer, Jack produces Cotton and Grains. Gator plot has a total of 80 acres of land, and in this field, it takes 10 acres to produce 1 unit of Cotton and 20 acres to produce 1 unit of Grains. On the other hand, Brown Plot has 100 acres of land. In this field, it takes 20 acres to produce 1 unit of Cotton and 10 acres to produce 1 unit of Grains. However, because Jack has been farming for a while now, he is worried about overharvesting COTTON because if he harvests too much Cotton, then the land will become barren. Consequently, there is a quantity restriction on Cotton and only Cotton. The restriction is outlined as follows: FIRST, there is a quantity restriction of 4 Cotton in Gator Plot. This means that Gator Plot is allowed to produce a maximum of 4 units of Cotton. SECOND, there is a…
Farmer Jack is a well-established farmer who owns two plots of land. He refers to his fields of land by names. One field/plot of land is called Gator Plot, and the other one is called Brown Plot. As a farmer, Jack produces Cotton and Grains. Gator plot has a total of 80 acres of land, and in this field, it takes 10 acres to produce 1 unit of Cotton and 20 acres to produce 1 unit of Grains. On the other hand, Brown Plot has 100 acres of land. In this field, it takes 20 acres to produce 1 unit of Cotton and 10 acres to produce 1 unit of Grains. However, because Jack has been farming for a while now, he is worried about overharvesting COTTON because if he harvests too much Cotton, then the land will become barren. Consequently, there is a quantity restriction on Cotton and only Cotton. The restriction is outlined as follows: FIRST, there is a quantity restriction of 4 Cotton in Gator Plot. This means that Gator Plot is allowed to produce a maximum of 4 units of Cotton. SECOND, there is a…
Consider the following mini-economy composed of two firms (Firm 1 and Firm 2).Firm 1 is a farm and grows $4,000 of Wheat. Firm 1 keeps $1,000 of wheat in a silo to sell nextyear. Firm 1 then sells its remaining $3,000 of wheat directly to Firm 2. Firm 1 uses the $3,000 itreceives from Firm 2 to pay $2,000 to its workers, $200 on interest payments in outstandingdebts, and $800 in taxes.Firm 2 is a bakery and uses the $3,000 of wheat that it purchases to bake bread and sell it. Firm2 produces $7,000 of bread, selling $2,000 to the Government and selling $5,000 to privateconsumers. Firm 2 pays its workers $1,000, pays $1,000 in taxes, and the owner keeps the restof the money remaining as profits.13. Calculate GDP for this mini-economy using the value-added approach. What is thecontribution of each firm to this total GDP? 14. Calculate GDP for this mini-economy using the expenditure approach. What is thecontribution of each firm to this total GDP and what is the contribution of each of…
Firm T produces 600 tires at a cost of $30 each, and sells all 600 tires to Firm B at a cost of $35 each. Firm F produces 300 bicycle frames at a cost of $200 each, and sells all 300 frames to Firm B for $225 each. Firm B produces 300 bicycles at a cost of $500 each. Firm B sells 280 bicycles to consumers for $600 each. They do not sell the remaining bicycles. In each blank, enter a whole number with no commas and no dollar sign. In this simple economy the value of consumption spending is $ and the value of investment spending is $
FCI owns 10 apartment buildings in a college town, which it rents exclusively to students. Each apartment building contains 100 rental units, but the owner is having cash flow problems due to an average vacancy rate of nearly 50 percent. The apartments in each building have comparable floor plans, but some buildings are closer to campus than others. The owner of FCI has data from last year on the number of apartments rented, the rental price (in dollars), and the amount spent on advertising (in hundreds of dollars) at each of the 10 apartments. These data, along with the distance (in miles) from each apartment building to campus, are presented in rows 1 through 11 of Table. The owner regressed the quantity demanded of apartments on price, advertising, and distance. The results of the regression are reported in rows 16 through 35 of Table. What is the estimated demand function for FCI’s rental units? If FCI raised rents at one complex by $100, what would you expect to happen to the…
Determine whether each of the following would increase or decrease the opportunity costs for mothers who decide not to work outside the home. Explain your answers. Higher levels of education for women Higher unemployment rates for women Higher average pay levels for women Lower demand for labor in industries that traditionally employ women Many households supplement their food budget by cultivating small vegetable gardens. Explain how each of the following might influence this kind of household production: Both husband and wife are professionals who earn high salaries. The household is located in a city rather than in a rural area. The household is located in a region where there is a high sales tax on food. The household is located in a region that has a high property tax rate.
Consider Live Happley Fields, a small player in the strawberry business whose production has no individual effect on wages and prices. Live Happley's production schedule for strawberries is given in the following table: NOTE: here are the options for the BLANKS when you get to those parts At the given wage and price level, Live Happley should hire _____ (one worker OR two worker OR three worker OR four worker OR five worker) Now Live Happley should hire _____ (one worker OR two worker OR three worker OR four worker OR five worker) when the output price is $15 per litre. Assuming that all strawberry-producing firms have similar production schedules, an increase in the price of strawberries will cause the ____(demand for OR supply of) strawberry pickers to ______ (decrease OR increase) Suppose that wages increase to $250 due to an increased demand for workers in this market. Assuming that the price of strawberries remains at $15 per litre, Live Happley will now hire ______ (one worker…