Suppose the residents of country P consume only peaches and pecans. The table below shows the prices and quantity of peaches and pecans consumed for two consecutive years. Note that all prices are per bushel. Suppose that the typical consumer basket consists of 10 bushels of peaches and 15 bushels of pecans. Assume 2000 is the base year. Year 2000 2001 Price $11 $9 Peaches Quantity 10 20 What is the consumer price index for 2001? Price $6 $10 Pecans Quantity 10 10
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- 4. We saw that the Social Security adjustment for changing prices would typically make recipients at least as well-off as they were at the base year. What kind of price changes would leave them just as well-off, no matter what kind if preferences they had? 5. In the same framework as the above question, what kind of preferences would leave the consumer just as well-off as he was in the base year, for all price changes?Assume that Abdullah has RO 44 to spend on Energy drinks and Protein Bars each month and that both goods must be purchased whole (no fractional units). Energy drinks cost RO 8 and Protein Bars cost RO 3 each. Abdullah’s preferences for Energy drinks and Protein Bars are summarized by the following information: Energy drinks Protein Bars No. per Month TU MU MU/Px No. per Month TU MU MU/Py 1 42 1 18 2 78 2 33 3 108 3 45 4 132 4 54 5 150 5 60 6 162 6 63 7 168 7 66 Fill in the figures for marginal utility and marginal utility per dollar both Energy drinks and Protein Bars. Are these preferences consistent with the law of diminishing marginal utility? Explain briefly. Given the budget of RO 22, what quantity of Protein Bars and what quantity of Energy drinks will maximize Joe’s…1. If the sales tax increases to 12%, what percentage of our Archie's income will jeff now pay in text on his $150 bill? Show your work. 2. Will he make adjustments to his purchases and if yes, how will he adjust? If no, why not? 3. If the sales tax increases to 12%, what percentage of Jeff's income will Archie pay in tax on his $150 bill? Show your work.
- Why does the quality/new goods bias arise if we calculate the inflation rate based on a fixed basket of goods?Edna is living in a retirement home where home where most of her needs are taken care of, but she has some discretionary spending. Based on the basket of goods in Table 22.5, by what percentage does Ednas cost of living increase between time 1 and time 2The “prime” interest rate is the rate that bankscharge their best customers. Based on the nominalinterest rates and inflation rates in Table 19.10, inwhich of the years would it have been best to be alender? Based on the nominal interest rates and inflationrates in Table 19.10, in which of the years given wouldit have been best to be a borrower?
- (Please 2 answer s) Question 27 : Consider tablets which are used by a majority of consumers. Suppose that due to the development of 5G technology, tablets underwent a major advance from 2020 to 2021 in terms of the number of functions they could do. The tablets in 2021 sold at the same price as those in 2020. Which of the following would tend to increase in 2021 as a result of this major advance? Select only one : O CPI O Purchasing power of money O GDP deflator O None of the above Question 28 : Suppose a country enters a major recession where the number of unemployed increases a lot and the wages of jobs fall a lot. Assuming no other major changes, what would be the effect of this change on a country's CPI? Select only one : O Increase O Decrease O Stays the same O UnclearWorkers are compensated by firms with benefits in addition to wages and salaries. The most prominent offered by many firms is health insurance. Suppose that in 2000, workers at one steel plant were paid $30 per hour and in addition received health benefits at the rate of $6 per hour. Also suppose that by 2010 workers at that plant were paid $31.50 per hour but received $13.5 in heakth insurance benefits. a. By what precentage did total compensation (wages plus benefits ) change at this plant from 2000 to 2010? Total compensation increased or decreased by________ percent? What was the approximate average annual percentage change in total compensation? b. By what percetage did wages change at this plant from 2000 to 2010? Wages increased or decreased by ______percent? What was the approximate average annual percentage in wages? c. If workers value a dollar of heath benefits as much as they value a dollar of wages, by what total percentage will they feel their incomes have risen over…Suppose the residents of country P consume only peaches and pecans. The table below shows the prices and quantity of peaches and pecans consumed for two consecutive years. Note that all prices are per bushel. Suppose that the typical consumer basket consists of 10 bushels of peaches and 15 bushels of pecans. Assume 2000 is the base year. Peaches Pecans Year Price Quantity Price Quantity 2000 $11 10 $6 10 2001 $9 20 $10 10 What is the consumer price index for 2001? a. 120 b. 240 c. 200 d. 100
- The Environmental Protection Agency (EPA) wants to investigate the value workers place on being able to work in “clean” mines over “dirty” mines. The EPA conductsa study and finds the average annual wage in clean mines to be $42,250 and the average annual wage in dirty mines to be $47,250.a. According to the EPA, how much does the average worker value working in a clean mine?b. Suppose the EPA could mandate that all dirty mines become clean mines and that all workers who were in a dirty mine must therefore accept a $5,000 pay decrease. Are these workers helped by the intervention, hurt by the intervention, or i ndifferent to the intervention?Suppose an economy produces only 2 products that will also be used for directconsumption, as per the article at the end of the exam: chicken wings and donuts. Inthe second quarter of 2021 (the base period), 180,000 pounds of chicken wings wereproduced, at a value of $3.50 per pound, while in the second quarter of 2022,production of chicken wings increased to 200,000 pounds, at a value of $3.75 perpound. In the second quarter of 2021 (the base period), 85,000 donuts were producedat a value of $0.85 per donut, while in the second quarter of 2022, donut productionincreased to 100,000 donuts, each at a value of $0.95 per donut. The population inthis economy is 1000 individuals in 2022, while the number of hours worked in 2022is 5000. Also, the quantities that were produced in 2021 represent the quantities thatwere purchased by the typical household, meaning that everything that was producedwas sold.d. Solve for the amount of labor productivity in the second quarter of 2022.e. Solve for the…Assume that the real rate of interest is 5 percent and a lender charges a nominal interest rateof 15 percent. If a borrower expects that the rate of inflation next year will be 10 percent andthe actual rate of inflation next year is 10 percent, Group of answer choices the lender benefits from inflation, while the borrower loses from inflation. the borrower benefits from inflation, while the lender loses from inflation. neither the borrower nor the lender benefits from inflation. both the borrower and the lender lose from inflation.