Macroeconomics
21st Edition
ISBN: 9781259915673
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Chapter 1, Problem 11DQ
To determine
Correlation and causation.
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Suppose a typical American consumer purchases three goods, creatively named good A good B. and good The prices of these goods are listed in Table 8P-2. [LO 8.1 aIf the typical consumer purchases two units of each good, what was the percentage increase in the price paid by the consumer for this basket between 2015 and 2016? b If the typical consumer purchases 10 units of good B and 2 units of both good A and good C what was the percentage increase in the price paid by the consumer for this basket? c. Given your answers to parts a and b what is the relationship between the market basket and the nements price change ?
Each statement below is part of an economicmodel. Indicate whether the statement is a prediction of cause and effect or an assumption. [LO 1.6]a. People behave rationally.b. If the price of a good falls, people will consume more of that good.
Table 8P-4 lists the prices and quantities consumed of three different goods from 2014-2016. [LO 8.2] a. For 20142015, and 2016, determine the amount 4, 20 that a typical consumer pays each year to pur chase the quantities listed in the table. b. Using the amounts you found in part a, calculate the percentage change in the amount the con sumer paid from 2014 14 to 2015 , and from 2015 to 2016. c. Why is it problematic to use your answers to part b as a measure of inflation ? d. Suppose we take 2014 as the base year, which implies that the market basket is fixed at the 2014 consumption levels. Using 2014 consump tion levels, now find the rate of inflation from 2014 to 2015 and from 2015 to 2016. (Hint : First calculate the cost of the 2014 market basket using each year's prices and then find the per centage change in the cost of the basket. )
e. Repeat the exercise from part d, now assuming that the base year is 2015. f. Why were your answers from parts d and e different?
Chapter 1 Solutions
Macroeconomics
Ch. 1.2 - Prob. 1QQCh. 1.2 - Prob. 2QQCh. 1.2 - Prob. 3QQCh. 1.2 - Prob. 4QQCh. 1.A - Briefly explain the use of graphs as a way to...Ch. 1.A - Prob. 2ADQCh. 1.A - Prob. 3ADQCh. 1.A - Prob. 1ARQCh. 1.A - Prob. 2RQCh. 1.A - Prob. 2ARQ
Ch. 1.A - Prob. 1APCh. 1.A - Prob. 2APCh. 1.A - Prob. 3APCh. 1.A - Prob. 4APCh. 1.A - Prob. 5APCh. 1.A - Prob. 6APCh. 1.A - Prob. 7PCh. 1.A - Prob. 7APCh. 1.A - Prob. 8PCh. 1.A - Prob. 8APCh. 1 - Prob. 1DQCh. 1 - Prob. 2DQCh. 1 - Prob. 3DQCh. 1 - Prob. 4DQCh. 1 - Prob. 5DQCh. 1 - Prob. 6DQCh. 1 - Prob. 7DQCh. 1 - Prob. 8DQCh. 1 - Prob. 9DQCh. 1 - Prob. 10DQCh. 1 - Prob. 11DQCh. 1 - Prob. 1RQCh. 1 - Prob. 2RQCh. 1 - Prob. 3RQCh. 1 - Prob. 4RQCh. 1 - Prob. 5RQCh. 1 - Prob. 6RQCh. 1 - Prob. 7RQCh. 1 - Prob. 1PCh. 1 - Prob. 2PCh. 1 - Prob. 3PCh. 1 - Prob. 4PCh. 1 - Prob. 5PCh. 1 - Prob. 6PCh. 1 - Prob. 7PCh. 1 - Prob. 8P
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- Suppose you have two job offers and are considering the trade-offs between them. Job A pays$45,000 per year and includes health insurance andtwo weeks of paid vacation. Job B pays $30,000 peryear and includes four weeks of paid vacation butno health insurance. [LO 1.2]a. List the benefits of Job A and the benefits ofJob B.b. List the opportunity cost of Job A and theopportunity cost of Job Barrow_forwardFrom the list below, select the characteristics thatdescribe a good economic model. [LO 1.6]a. Includes every detail of a given situation.b. Predicts that A causes B.c. Makes approximately accurate assumptions.d. Fits the real world perfectly.e. Predicts things that are usually true.arrow_forwardA consumer has $300 to spend on goods X and Y. The market prices of these two goodsare Px = $15 and Py = $5. (LO2)a. What is the market rate of substitution between goods X and Y?arrow_forward
- Think about how and why goods and resourcesare scarce. Goods and resources can be scarcefor reasons that are inherent to their nature at alltimes, temporary or seasonal, or that are artificially created. Separate the goods listed below into two groups; indicate which (if any) are artificiallyscarce (AS), and which (if any) are inherentlyscarce (IS). [LO 1.1]a. air of any qualityb. landc. patented goodsd. original Picasso paintingsarrow_forwardWhat is the direction of slope indicated by thefollowing examples? [LO A.3]a. As the price of rice increases, consumerswant less of it.b. As the temperature increases, the amount ofpeople who use the town pool also increases.c. As farmers use more fertilizer, their output oftomatoes increases.arrow_forwardOver the past decade, holiday gift cards have become increasingly popular at online retailers. Not long ago, online shoppers had to really hunt at most e-retailers’ sites to purchase a gift certificate, but today it is easier to purchase gift cards online than at traditional retail outlets. Do you think online gift cards are merely a fad? Explain carefully. (LO6)arrow_forward
- Your friend Sam has been asked to prepare appetizers for the university reception. She has anunlimited amount of ingredients and 6 hours inwhich to prepare them. Sam can make 300 minisandwiches or 150 servings of melon slices toppedwith smoked salmon and a dab of sauce per hour.[LO 2.1]a. What is Sam’s opportunity cost of makingone mini-sandwich?b. What is Sam’s opportunity cost of baking onemelon appetizer?c. Suppose the reception has been postponed,and Sam has an extra 4 hours to prepare.What is the opportunity cost of making onemini-sandwich now?d. Suppose the reception has been postponed,and Sam has an extra 4 hours to prepare.What is the opportunity cost of making onemelon appetizer now?e. Suppose Sam’s friend Chris helpsby preparing the melon slices, increasingSam’s productivity to 300 mini-sandwichesor 300 melon appetizers per hour. What isthe opportunity cost of making one minisandwich now?f. Suppose Sam’s friend Chris helps by preparing the melon slices, increasing…arrow_forwardYou rent a car for $29.95. The first 150 miles are free, but each mile thereafter costs 15 cents. You plan to drive it 200 miles. What is the marginal cost of driving the car? (LO1-2) Suppose you currently earn $30,000 a year. You are considering a job that will increase your lifetime earnings by $300,000 but that requires an MBA. The job will mean also attending business school for two years at an annual cost of $25,000. You already have a bachelor’s degree, for which you spent $80,000 in tuition and books. Which of the above information is relevant to your decision on whether to take the job? (LO1-2)arrow_forwardSuppose the price of a sweater is $15. Julia’s benefit from purchasing each additional sweater isgiven in the table below. Julia gets the most benefitfrom the first sweater and less benefit from eachadditional sweater. If Julia is behaving rationally,how many sweaters will she purchase? [LO 1.2]Marginal benefit ($)1st sweater 502nd sweater 353rd sweater 304th sweater 235th sweater 126th sweater 8arrow_forward
- Suppose that three volunteers are preparingcookies and cupcakes for a bake sale. Diana canmake 27 cookies or 18 cupcakes per hour; Andycan make 25 cookies or 17 cupcakes; and Sam canmake 10 cookies or 12 cupcakes. [ LO 2.2]a. Who has the absolute advantage at makingcookies?b. At making cupcakes?arrow_forwardRefer to Table 11W.1 and suppose the price of new product C is $2 instead of $4. How does this affect the optimal combination of products A, B, and C for the person represented by the data? Explain: “The success of a new product depends not only on its marginal utility but also on its price.”arrow_forwardOne type of systematic error arises because people tend to think of benefits in percentage terms rather than in absolute dollar amounts. As an example, Samir is willing to drive 20 minutes out of his way to save $4 on a grocery item that costs $10 at a local market. But he is unwilling to drive 20 minutes out of his way to save $10 on a laptop that costs $400 at a local store. In percentage terms, how big is the savings on the grocery item? On the laptop? In absolute terms, how big is the savings on the grocery item? On the laptop? If Samir is willing to sacrifice 20 minutes of his time to save $4 in one case, shouldn’t he also be willing to sacrifice 20 minutes of his time to save $10?arrow_forward
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