Chapter 5
Homework Solutions
1.
a. Mystery novels have more elastic demand than required textbooks because
mystery novels have close substitutes and are a luxury good, while required
textbooks are a necessity with no close substitutes. If the price of mys
Chapter 11
Homework Solutions
1.
a. Find the price of one unit of each good in each year:
Year
2013
2014
Cauliflow
er
$2
$3
Broccoli
Carrots
$1.50
$1.50
$0.10
$0.20
b. If 2013 is the base year, the market basket used to compute the CPI is 100
heads of cau
Eduardo Campa
Econ-102
Homework #1
Podcast Chosen: Arnold Kling on Specialization and Trade
Russ Roberts and Arnold Kling
It seems that with this podcast there was a specific viewpoint on the specialization and
trade of the global markets. For instance wh
Question 1
Which of the following is not a widely acknowledged problem with using the
CPI as a measure of the cost of living?
Selected Answer:
0 out of 1 points
Answers:
[None Given]
a.
b.
unmeasured quality change
introduction of new goods
c.
unmeasure
Chapter 1 Homework
Solutions
1.
a.
A family deciding whether to buy a new car faces a trade-off between the
cost of the car and other things they might want to buy. For example,
buying the car might mean they must give up going on vacation for the
next tw
Chapter 11 #2,
2.
a. Find the price of one unit of each good in each year:
Year
2013
2014
Cauliflo
wer
$2
$3
Broccoli
Carrots
$1.50
$1.50
$0.10
$0.20
b. If 2013 is the base year, the market basket used to compute the CPI is 100 heads of cauliflower,
50 bu
Chapter 6
Homework Solutions
1.
If the price ceiling of $40 per ticket is below the equilibrium price, then quantity
demanded exceeds quantity supplied, so there will be a shortage of tickets. The
policy decreases the number of people who attend classical
Homework #4
1.
In studying for his economics final, Sam is concerned about only two things: his
grade and the amount of time he spends studying. A good grade will give him a
benefit of 20; an average grade, a benefit of 5, and a poor grade, a benefit of 0
Chapter 2 Homework
Solutions
1. See Figure 5; the four transactions are shown.
a. $1
c. $30
a. $1
c. $30
Markets for
Goods and Services
a. quart of milk
c. haircut
a. quart of milk
c. haircut
Firms
Households
b. one hour of work
d. Acme's capital
b. one h
Question 1
For a good that is a luxury, demand
1 out of 1 points
Selected Answer:
tends to be elastic.
a.
tends to be elastic.
Answers:
a.
b.
c.
d.
tends to be inelastic.
cannot be represented by a demand curve in the usual
way.
has unit elasticity.
Ques
Chapter 7
Homework Solutions
1.
a. Consumer surplus is equal to willingness to pay minus the price paid. Therefore,
Melissas willingness to pay must be $200 ($120 + $80).
b. Her consumer surplus at a price of $90 would be $200 $90 = $110.
c. If the price
Chapter 10
Homework Solutions
1.
a. Consumption increases because a refrigerator is a good purchased by a
household.
b. Investment increases because a house is an investment good.
c. Consumption increases because a car is a good purchased by a household,
Chapter 21
Homework Solutions
1.
a. When the Feds bond traders buy bonds in open-market operations, the
money-supply curve shifts to the right from MS 1 to MS 2, as shown in Figure 1. The
result is a decline in the interest rate.
Figure 1 Figure 2
b. When
Chapter 17
Homework Solutions
1.
In this problem, all amounts are shown in billions.
a.
Nominal GDP = P Y = $10,000 and Y = real GDP = $5,000, so P = (P Y )/Y =
$10,000/$5,000 = 2.
Because M V = P Y, then V = (P Y )/M = $10,000/$500 = 20.
b.
If M and V ar
Chapter 14
Homework Solutions
1.
The future value of $24 invested for 400 years at an interest rate of 7% is (1.07) 400
$24 = $13,600,000,000,000 = $13.6 trillion.
2.
a.
The present value of $15 million to be received in four years at an interest
rate of
Chapter 22
Homework Solutions
1.
Figure 8 shows two different short-run Phillips curves depicting these four points.
Points a and d are on SRPC1 because both have expected inflation of 3%. Points b
and c are on SRPC2 because both have expected inflation o
Chapter 20
Homework Solutions
Price
Level
Long-Run
Aggregate Supply
AS1
AS2
AD1
AD2
Output
Figure 6
1.
a. The current state of the economy is shown in Figure 6. The aggregate-demand
curve (AD1) and short-run aggregate-supply curve (AS1) intersect at the s
Chapter 13
Homework Solutions
1.
a.
The bond of an eastern European government would pay a higher interest
rate than the bond of the U.S. government because there would be a greater risk of
default.
b.
A bond that repays the principal in 2040 would pay a
Chapter 15
Homework Solutions
1.
a.
The adult population consists of the number of employed (143,322,000) plus
the number of unemployed (12,332,000) plus those not in the labor force
(89,008,000), which equals 244,662,000.
b.
The labor force consists of t
Chapter 18
Homework Solutions
1.
a.
When an American art professor spends the summer touring museums in
Europe, she spends money buying foreign goods and services, so U.S. exports are
unchanged, imports increase, and net exports decrease.
b.
When students
Chapter 16
Homework Solutions
3.
a. Here is BSB's T-account:
Reserves
Loans
Beleaguered State Bank
Assets
Liabilities
$25 Deposits
$250
million
million
$225
million
b. When BSB's largest depositor withdraws $10 million in cash and BSB
reduces its loans ou