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Unformatted text preview: Economics 420 - Spring 2010 Mike Aguilar Intermediate Theory: Money, Income & Employment UNC at Chapel Hill HW # 1 Due - 01/25/2010 Instructions : • Please explain your answers thoroughly and show all necessary work. • State your assumptions carefully. • There may be more than one correct solution. • Please type your answers whenever possible. • Students may work together, but each must submit their own work. • The honor code is in effect. 1. (5pts) A U.S. based manufacturer of electronics equipment produces 5 especially long lasting digital cameras in Q1:2008. They have two inputs: 1) specialty metal imported from Taiwan for a total of $1,500, and 2) labor, which costs the firm a total of $50 for each camera produced. The firm is able to sell 4 units to consumers at $1,000 each. In the second quarter, they are able to sell the remaining camera for $950. The firm also produces five new cameras and sells four of these for $1,000 each. The firm incurs the same cost structure in Q2 as it did in Q1. Detail the national income and product account logs for both Gross Domestic Product (GDP) and National Income (NI) in Q1 and Q2 2008. Moreover, to the extent possible, attribute each transaction to a component of GDP....
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- Spring '08
- Economics, GDP deflator