Quick Quiz 2! - 1.070 Production 150 $600 $4*1.03*150 $4*1.07*150 Labor Input 1 $360 $360*1.03 $360*1.05 Land Input 1 $240 $247.2 $264 1 Calculate

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© Hadi Salehi Esfahani Quick Quiz 2! Mealia is a one-product country: It produces corn using labor and land. People in Mealia spend all their incomes on corn and imported meat. Here’s the information about the unit consumer basket of goods, prices, output value, and unit input costs under the two scenarios for 2011. Consumer Basket Prices Quantity 2010 2011 Scenario 1 2011 Scenario 2 Corn 2 $4 $4*1.03 $4*1.07 Meat 1 $4 $4*1.08 $4*1.07 CPI 1 Production 150 $600 $4*1.03*150 $4*1.07*150 Labor Input 1 $360 $360*1.03 $360*1.05 Land Input 1 $240 1. Calculate the consumer price index for 2011 under the two scenarios. 2. Calculate the percentage change in the real returns to land and labor in 2011 under the two scenarios.
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© Hadi Salehi Esfahani Solutin to Quick Quiz 2! Consumer Basket Prices Quantity 2010 2011 Scenario 1 2011 Scenario 2 Corn 2 $4 $4*1.03 $4*1.07 Meat 1 $4 $4*1.08 $4*1.07 CPI 1 1.047
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Unformatted text preview: 1.070 Production 150 $600 $4*1.03*150 $4*1.07*150 Labor Input 1 $360 $360*1.03 $360*1.05 Land Input 1 $240 $247.2 $264 1. Calculate the consumer price index for 2011 under the two scenarios. © Hadi Salehi Esfahani Solutin to Quick Quiz 2! Consumer Basket Prices 2010 2011 Scenario 1 2011 Scenario 2 CPI 1 1.047 1.070 Inflation-4.7% 7.0% Wage increase-3.0% 5.0% Rent increase-3.0% 9.8% 1. Calculate the percentage change in the real returns to land and labor in 2011 under the two scenarios. • Change in real return to labor under Scenario 1 =3.0 4.7 = 1.7% • Change in real return to land under Scenario 1 = 3.0 4.7 = 1.7% • Change in real return to labor under Scenario 2 = 5.0 7.0 = 2.0% • Change in real return to land under Scenario 2 = 9.8 7.0 = 2.8%...
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This note was uploaded on 01/27/2012 for the course ECON 509 taught by Professor Villamil during the Fall '08 term at University of Illinois, Urbana Champaign.

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Quick Quiz 2! - 1.070 Production 150 $600 $4*1.03*150 $4*1.07*150 Labor Input 1 $360 $360*1.03 $360*1.05 Land Input 1 $240 $247.2 $264 1 Calculate

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