Provide solutions to the questions attached

20. Suppose you have a team of two workers: one is a baker and one is a chef. Explain why the kitchen can produce more meals in a given period ot time it each worker specializes in what they do best than if each worker tries to do everything from appetizer to dessert. 21. Why would division of labor without trade not work? 22. Can you think of any examples of free goodsI that is, goods or services that are not scarce? 23. A balanced federal budget and a balance oftrade are secondary goals of macroeconomics, while growth in the standard of living {for example} is a primary goal. Why do you think that is so? 24. Macroeconomics is an aggregate of what happens at the microeconomic level. Would it be possible for what happens at the macro level to differ from how economic agents would react to some stimulus at the micro level? Hint: Think about the behavior of crowds. 25. Why is it unfair or meaningless to cr'rticize a theory as I\"unrealistic?l 26. Suppose, as an economist, you are asked to analyze an issue unlike anything you have ever done before. Also, suppose you do not have a specic model for analyzing that issue. What should you do? Hint: What would a carpenter do in a similar situation? 2?. Why do you think that most modern countries' economies are a mix of command and market types? 23. Can you think of ways that globalization has helped you economically? Can you think of ways that it has not? 2009 Price 2009 Quantity (base year) 2010 Quantity 2010 Price Food 6 $2.5 8 $2.5 Clothes 5 $6 10 $10 Entertainment 2 $4 5 $5 The outputs and prices of goods and services in Country X are shown in the table above. Assuming that 2009 is the base year, calculate (a) and (b). (a) The nominal gross domestic product (GDP) in 2010 (b) The real GDP in 2010 Note for sample question: This question is from a past AP Exam in which showing work was not required. Remember that on this year's exam, students will be expected to show their work on any calculation questions. (c) If in one year the price index is 50 and in the next year the price index is 55, what is the rate of inflation from one year to the next? (d) Assume that next year's wage rate will be 3 percent higher than this year's because of inflationary expectations. The actual inflation rate is 4 percent. At the beginning of next year, will the real wage be higher, lower, or the same as today? (e) Assume that Sara gets a fixed-rate loan from a bank when the expected inflation rate is 3 percent. If the actual inflation rate turns out to be 4 percent, who benefits from the unexpected inflation: Sara, the bank, neither, or both? Explain.The Census Bureau tracks a variety of retail and service sales using the Monthly Retail Trade Survey. Consider the monthly sales (in millions of dollars) from January 2014 through April 2018 for office supply and stationery stores. 1. Create a time plot for monthly sales for office supply and stationary stores with the months labeled "1" for January, "2" for February, and so on. Show your plot in the space provided below: (2p.) 2. Interpret the characteristics of monthly sales for this sector in terms of time series component, such as trend, seasonality, cyclical pattern etc. over the time. Do you observe any pattern from the data that repeats itself at a regular interval? (4p.) 3. In which month do you observe a dramatic increase or decrease for the sales? Explain the reason very briefly. (2p.) 4. Regress the monthly sales to a time variable and show the regression output in the space provided below. Interpret the results in terms of explained variability and the significance of the model. (6p.) 5. Create indicator variables to represent each month as a category. Consider December data as a baseline model. How many indicator variables do we need to recode months as different categories? (3p.) 6. Explain very briefly the reason why we need indicator variables, in other words why we need to recode each month as a different category and include in the regression analysis? (4p.) 7. Regress the monthly sales to a time variable along with all indicator variables. The new model captures the linear trend along with the seasonal pattern in the time series. Show the output of the trend-and-season model and the multiple regression equation including all indicator variables in the space provided below. Interpret the results in terms of model fit which is reflected in explained variability and the significance of the trend-and-season model3. (20 points) Principal-Agent The probability of winning a soccer match is determined in part by the level of effort of the players. Assume that the probability of winning a match is given by the function: Pur(e) = 2e- e2 Where e is the level of effort by the average player. e is continuous and bounded by the [0, 1] interval. If a team wins a match; the owner of the team will earn $1, 000; if the match ends in a loss or a draw then the owner earns nothing. Then, the expected revenues are equal to R(e) = 1,000P,,(e). For simplicity assume that the only cost for the owner is to pay the salary of 11 players. Consider the following wage arrangements: 1. w =$150 (Regardless of the outcome of the game) 2. w = -R(e) 3. w = R(e) - 900 The utility of the average player is given by u(e) = w - 250e (a) (10 points) Find the optimal level of effort for each of the proposed wage arrangements. (b) (5 points) Find the profit level for each different contract. (c) (5 points) What's the optimal contract for the owner