Question
1- Each year, Peter typically does all his own landscaping and yard work. He spends $160 per year on mulch for his flower beds, $240
1- Each year, Peter typically does all his own landscaping and yard work. He spends $160 per year on mulch for his flower beds, $240 per year on flowers and plants, $80 on fertilizer for his lawn, and $174 on gasoline and lawn mower maintenance. The lawn and garden store where he obtains his mulch and fertilizer charges other customers $390 for the service of spreading that much mulch in flower beds and $160 for the service of distributing fertilizer over a yard the size of Peter's. Paying a professional yard care service to mow his lawn would require an expenditure of $1,800 per year, but in that case, Peter would not have to buy gasoline or maintain his own lawn mower.
a. In a normal year, how much Peter's landscaping and yard work contribute to GDP?
b. Suppose that Peter has developed allergy problems this year and will have to reduce the amount of his yard work. He can wear a mask while running his lawn mower, so he will keep mowing his yard, but he will pay the lawn and garden center to spread mulch and distribute fertilizer. How much will all the work on Peter's yard contribute to GDP this year?
c. As a follow-up to part (b), at the end of the year, Peter realizes that his allergies are growing worse and that he will have to arrange for all his landscaping and yard work to be done by someone else next year. How much will he contribute to GDP next year?
2- The following table depicts the daily output, price per unit, and total costs of a monopoly book publisher
Output (Books) Price per book ($) Total Cost($) Total Revenue($) Total Profit($) Marginal Cost($) Marginal Revenue($)
0 20 8
1 19 16
2 18 21
3 17 24
4 16 25
5 15 27
6 14 31
7 13 38
8 12 48
9 11 62
10 10 81
a) Complete the missing cells : Total revenue, total profit, marginal cost, and marginal revenue.
b) What is the profit-maximizing level of output? Please explain.
c) Draw a diagram depicting the marginal revenue, marginal cost, and the demand (price) curves for this book publisher and illustrate the determination of its profit-maximizing output rate. Please use excel
3-Currently, the price index is 110.20, the nominal interest rate is 7.25 percent, and the expected inflation rate is 2.75 percent.The current year is the base year for the price index used to calculate inflation.
a) What is the real interest rate?
b) What is the anticipated value of the price index next year?
4-The American Manufacturing Company produces only one product. The firm purchases a key input at a price of $4 per unit of production. The firm then pays a wage rate of $6 per unit for the time that labor is exerted. In addition, $2 of indirect inputs is paid for each final unit of output produced.The firm sells every units of the product for $20.What is the contribution of each unit of output to GDP in the current year?
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