Economics, Student Value Edition Plus MyLab Economics with Pearson eText - Access Card Package (6th Edition)
6th Edition
ISBN: 9780134421322
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
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Chapter 2, Problem 2.2.15PA
To determine
Comparative advantage and working hours.
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Let us use what we have learned in the first part of the chapter to compare living standards in the United States and a hypothetical country, Argonia, in 2008.
The U.S. GDP in 2008 was approximately $14 trillion, and the U.S. population was approximately 300 million. What was the per capita GDP in the United States in 2008?
Suppose that in the local currency, Argonian dollars, Argonia’s GDP in 2008 was 1 trillion, and its population was 10 million. What was Argonia’s GDP per capita in Argonian dollars? What problems do you foresee in comparing this number to the U.S. GDP per capita in U.S. dollars computed in part (a)?
The Argonian dollar/U.S. dollar exchange rate was equal to 6 on January 1, 2008 (meaning that 1 U.S. dollar was worth 6 Argonian dollars) and reached 9 on August 1, 2008. Compute an exchange-rate-based measure of the GDP per capita in Argonia in U.S. dollars on these two dates. Do you think the change in Argonia’s exchange-rate-based measure of GDP per capita…
An economy consists of three workers: Gilberto, Lorenzo, and Sam. Each works 10 hours a day and can produce two services: mowing lawns and washing cars. In an hour, Gilberto can either mow 2 lawns or wash 1 car; Lorenzo can either mow 1 lawn or wash 1 car; and Sam can either mow 1 lawn or wash 2 cars.
For each of the scenarios listed in the following table, determine how many lawns will be mowed and how many cars will be washed per day and enter these values into the corresponding row.
Scenario
Lawns Mowed
Cars Washed
All three spend all their time mowing lawns. (A)
All three spend all their time washing cars. (B)
All three spend half their time on each activity. (C)
Gilberto spends half his time on each activity, while Lorenzo only washes cars and Sam only mows lawns. (D)
In the following table, identify the opportunity cost of washing cars for each worker.
Worker
Opportunity Cost of Washing Cars
Gilberto…
The magazine Women of China reported that Chinese women in big cities spent 63% of their income on consumer goods last year, up from a meagre 26% in 2007. Clothing accounted for the biggest chunk of that spending, at nearly 30%, followed by digital products such as cellphones and cameras (11%) and travel (10%). Chinese consumption as a whole grew faster than the overall economy in the first half of the year and is expected to reach 42% of GDP by 2020, up from the current 36%.
Source: The Wall Street Journal, August 27, 2010
If the economy had been operating at a full employment equilibrium,
(a) Describe the macroeconomic equilibrium after the rise in consumer spending.
(b) Explain and draw a graph to illustrate how the economy can adjust in the long run to restore a full-employment equilibrium.
Chapter 2 Solutions
Economics, Student Value Edition Plus MyLab Economics with Pearson eText - Access Card Package (6th Edition)
Ch. 2 - Prob. 1TCCh. 2 - Prob. 2TCCh. 2 - Prob. 2.1.1RQCh. 2 - Prob. 2.1.2RQCh. 2 - Prob. 2.1.3RQCh. 2 - Prob. 2.1.4PACh. 2 - Prob. 2.1.5PACh. 2 - Prob. 2.1.6PACh. 2 - Prob. 2.1.7PACh. 2 - Prob. 2.1.8PA
Ch. 2 - Prob. 2.1.9PACh. 2 - Prob. 2.1.10PACh. 2 - Prob. 2.1.11PACh. 2 - Prob. 2.1.12PACh. 2 - Prob. 2.1.13PACh. 2 - Prob. 2.1.14PACh. 2 - Prob. 2.2.1RQCh. 2 - Prob. 2.2.2RQCh. 2 - Prob. 2.2.3PACh. 2 - Prob. 2.2.4PACh. 2 - Prob. 2.2.5PACh. 2 - Prob. 2.2.6PACh. 2 - Prob. 2.2.7PACh. 2 - Prob. 2.2.8PACh. 2 - Prob. 2.2.9PACh. 2 - Prob. 2.2.10PACh. 2 - Prob. 2.2.11PACh. 2 - Prob. 2.2.12PACh. 2 - Prob. 2.2.13PACh. 2 - Prob. 2.2.14PACh. 2 - Prob. 2.2.15PACh. 2 - Prob. 2.3.1RQCh. 2 - Prob. 2.3.2RQCh. 2 - Prob. 2.3.3RQCh. 2 - Prob. 2.3.4RQCh. 2 - Prob. 2.3.5RQCh. 2 - Prob. 2.3.6RQCh. 2 - Prob. 2.3.7PACh. 2 - Prob. 2.3.8PACh. 2 - Prob. 2.3.9PACh. 2 - Prob. 2.3.10PACh. 2 - Prob. 2.3.11PACh. 2 - Prob. 2.3.12PACh. 2 - Prob. 2.3.13PACh. 2 - Prob. 2.3.14PACh. 2 - Prob. 2.3.15PACh. 2 - Prob. 2.3.16PA
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