Brave frontier valentine unit of choice

Equilibrium Price Calculations and Economic Questions
Subject
Economics

Question Description
There are 15 questions with some having sub-questions. Please make drawings visible and show all calculations not just the final answer.Instructions: Answer the following 15 questions. 1. Consider the above table. Which good does Jack have a comparative advantage in producing? Which good does Jill have a comparative advantage in producing? 2. Consider the following scenario. Xavier and Yannis can switch between producing baskets and producing birdhouses. Xavier uses 8 hours to produce 1 basket and 2 hours to produce 1 birdhouse. Yannis uses 1.5 hours to produce 1 basket and 2 hours to produce 1 birdhouse. In 24 hours, Xavier can produce 3 baskets and 12 birdhouses, and Yannis can produce 16 baskets and 12 birdhouses. If they decided to trade with one another, at which of the following prices would both Xavier and Yannis gain from trade? Justify your answer a) 30 baskets for 15 birdhouses b) 30 baskets for 18 birdhouses c) 30 baskets for 24 birdhouses 3. Before the first Gulf War, Kuwait had the capacity to produce a certain amount of oil from its oil wells. After the war, it found that capacity greatly diminished because the oil wells were on fire. Draw Kuwait's PPF before and after the war, assuming that the only two goods produced are oil and food. Further assume that setting the oil wells on fire did not affect Kuwait's ability to produce food. Explain why the PPF before the war is different from the PPF after the war. 4. Last year a very severe ice storm hit the north counties of New York state, and the states of Vermont and Maine. Electric poles were down and no one had power for days. It was reported that the price of kerosene heaters skyrocketed and the number purchased increased during this time. Using a supply and demand diagram, show the impact of the ice storm on the market for kerosene heaters. 5. For consumers, computers are a complement to computer software. Suppose the price of a computer falls. Simultaneously, suppose that the number of companies selling computer software decreases. How do these changes affect the price and quantity of computer software? 6. The price elasticity of demand for Pete's chocolate chip cookies is 1.5. Pete wants to increase his total revenue. Would you recommend that Pete raise or lower his price of cookies? Explain your answer. 7. KKTV 11 News wants to interview you, a leading economics expert in Colorado Springs, to learn why it is found that the price of roses increases by more than the price of greeting cards on Valentine's Day. What is your explanation? 8. Suppose that the world price of sugar is 20 cents a pound, Brazil does not trade internationally, and the equilibrium price of sugar in Brazil is 10 cents a pound. Brazil then begins to trade internationally. a) How does the price of sugar in Brazil change? Do Brazilians buy more or less sugar? Do Brazilian sugar growers produce more or less sugar? b) Does Brazil export or import sugar and why? 9. The graph below shows the car market in Mexico when Mexico places no restriction on the quantity of cars imported. The world price of a car is $10,000. a) If the government of Mexico introduces a $2,000 tari_ on car imports, what will be the price of a car in Mexico, the quantity of cars produced in Mexico, the quantity imported into Mexico, and the government's tari_ revenue? b) If the government of Mexico introduces an import quota of 4 million cars a year, what will be the price of a car in Mexico, the quantity of cars produced in Mexico, and the quantity imported? c) What argument might be used to encourage the government of Mexico to introduce a $2,000 tariff on car imports from the United States? Who will gain and who will lose as a result of Mexico’s tariff? 10. Consider two countries, the United States (U.S.) and Japan. In the U.S., there are two firms, Pikes Peak Steel (PPS) and General Motors (GM), both owned by U.S. citizens. In Japan, there is one firm, Toyota, owned by Japanese citizens. All of the employees of PPS and GM are U.S. citizens and all of the employees of Toyota are Japanese citizens. In a given year, PPS produces $6000 worth of steel and pays wages of $1500. It sells $2000 worth of steel to GM and $4000 worth of steel to Toyota. GM buys $2000 worth of steel from PPS and pays wages of $4000. GM produces $8000 worth of cars during the year; it sells $5500 worth of cars to consumers in the U.S., $1500 worth of cars to the U.S. government, and $1000 worth of cars to consumers in Japan. Toyota buys $4000 worth of steel from PPS and pays wages of $2500. Toyota produces $9500 worth of cars during the year; it sells $5000 worth of cars to consumers in the U.S., $1000 worth of cars to the Japanese government, and $3500 worth of cars to consumers in Japan. For the U.S. and Japan, calculate the following (please show your work) a) Gross domestic product (GDP) using the income and expenditure approaches. 11. The table below gives data on the production and prices in a small economy. Use 2012 as the base period. a) b) c) d) What does nominal GDP equal in 2012? What does nominal GDP equal in 2013? What does real GDP equal in 2013? Calculate the growth rate in real GDP from 2012-2013 12. Use the table below to answer the following questions. a) b) c) d) Calculate the unemployment rate at the end of April 2018 Calculate the number of people unemployed at the end of May 2018 Calculate the number of people employed at the end of May 2018 Calculate the unemployment rate at the end of May 2018 13