1) ABC is a small island nation. Its population total is 8000, and it has 5250 wage earners who earn an average of $2200 per year. Each wage earner spends $ 680 dollars per year buying local goods and services and $ 90.00 buying imports. The island exports a total of $15,000 worth of goods. The government tax rate is 10.5% and all government money is spent on building infrastructure and supporting schools. There is only one industry (Coal Mining) on the island, and it employs every wage earner. The industry spends $80,000 each year on new mining equipment.

A. (5pt) What is the GDP?

B. (5pt) What is GDP per capita?

2)

Widgets Gizmos Thingamajigs

Year Price Quantity Price Quantity Price Quantity

2004 $ 7.50 2 $4.50 3 $3.75 7

2005 $8.50 2 $5.00 2 $4.00 6

Calculate the nominal GDP for

a. (2.5pt) 2004

b. (2.5pt) 2005

c. (5pt) Using 2005 as the base year, calculate the real GDP for 2007.

3) Use the following national income accounting to answer exercises.

Consumption $500

Imports $30

Net Investment $25

Government purchases $150

Exports $20

Capital consumption allowance $20

Statistical discrepancy $6

Receipts of factor income from the rest of the world $30

Payments of factor income to the rest of the world $23

4) What is the GDP for this economy?

5) What is the GNP for this economy?

6)What is the NNP for this economy?

Use complete sentences to answer the following questions.

7) A. What are the determinants of demand?

B. What are the determinants of supply?

8) A. What is a household?

B. What is household spending called?

9) A. Calculate Pd, Qd, PS, equilibrium price and quantity of this free market. Graph all points. B. Calculate the consumer surplus, producer surplus, total surplus for the free market. Show each area on a graph

.

10) A. A fixed price of $6.00 was legally implemented. Explain how this price will affect this free market? Graph.

B. Label the new CS, PS and DWL due to the $6.00 price imposition

. 11). A. The Gizmo supplier is incurring a $1.50 subsidy. What is the new price and quantity for this market?

B. How is the market for Gizmos affected, show graphically?