MACROECONOMICS W/CONNECT
MACROECONOMICS W/CONNECT
18th Edition
ISBN: 9781307253092
Author: McConnell
Publisher: Mcgraw-Hill/Create
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Chapter 6, Problem 7DQ
To determine

Impact of inventories on demand, output and production.

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Apple, the consumer electronics giant, on Tuesday rolled out new versions of its popular iPod music player. CEO Steve Jobs also unveiled cheaper models of its Touch music player, a touchscreen-only device. An 8-gigabyte version now costs $229, down from $299. A 32-gigabyte model costs $399, down from $499. Suppose when the price of an iPod decreases by 20 percent, the number of songs downloaded on iTunes increases by 30 percent. Based on this information iTunes are   A. a normal good. B. an inferior good. C. substitutes for iPods. D. complements to iPods.
Analysts say that the increase in gasoline prices comes a drop in SUV sales and trade-in values at dealerships.The U.S. Department of energy said that during the past week, U.S. gasoline topped $3 a gallon - the highest level since October 2008. According to Alec Gutierrez,lead analyst for vehicle evaluation at Kelley Blue Book, SUV sales have decreased about 1 percent since the last major gasoline price hike in spring 2008. He doesn't believe that SUV sales will decrease significantly unless prices reach $3.50 to $4 per gallon. if a gasoline price hike of 5 percent caused the SUV sales drop described, what is the cross-price elasticity of demand between gasoline and SUVs?
Suppose the following transactions occur during the current year: 1. Kevin orders 50 cases of mezcal from a Mexican distributor at a price of $90 per case. 2. A U.S. company sells 300 spark plugs to a Korean company at $5.00 per spark plug. 3. Rajiv, a U.S. citizen, pays $900 for a TV he orders from Cosmart (a U.S. company).   Complete the following table by indicating how the combined effects of these transactions will be reflected in the U.S. national accounts for the current year. Hint: Be sure to enter a “0” if none of the transactions listed are included in a given category and to enter a minus sign when the balance is negative.   Amount (Dollars) Consumption   Investment   Government Purchases   Imports   Exports   Net Exports   Gross Domestic Product (GDP)
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