PRINCIPLES OF MACROECONOMICS(LOOSELEAF)
7th Edition
ISBN: 9781260110920
Author: Frank
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Question
Chapter 5, Problem 4P
(a):
To determine
Value added by each firm in the economy.
(b):
To determine
Increase in the GDP of 2016 due to these transactions.
(c):
To determine
Increase in the GDP in 2016 and 2017 due to these transactions.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
A young chef is considering opening his own sushi bar. To do so, he would have to quit his current job, which pays $30,000 a year, and take over a restaurant space that he owns and currently rents to his brother for $24,000 a year. His expenses at the sushi bar would be $50,000 for food and $2,000 for gas and electricity.
Suppose the sushi bar’s revenue from the first year is $120,000. What is the chef’s economics profit?
14,000
-14,000
66,000
68,000
Imagine Tom's annual salary as an assistant store manager is $30,000, he owns a building that rents for $10,000 yearly, and his financial assets generate $1,000 per year in interest. One day, after deciding to be his own boss, he quits his job, evicts his tenants, and uses his financial assets to establish a bicycle repair shop. To run the business, he outlays $15,000 in cash to cover all the costs involved with running the business, and earns revenues of $50,000. Which of the following statements is true?
Tom earns an accounting profit of $35,000.
Tom has an opportunity cost of $41,000.
All of these are true.
Tom experiences an economic loss of $6000.
Suppose that in the year 2015, Oceanaire, Inc. planned to produce 525,000 units of its lightweight scuba tanks. Of the
525,000 it planned to produce, a total of 35,000 units would be added to the inventory at its new plant in Arizona. Also
assume that these units have been selling at a price of $225 each and that the price has been constant over time.
Suppose further that this year the firm built a new plant for $6 million and acquired $3.0 million worth of equipment. It
had no other investment projects, and to avoid complications, assume no depreciation.
Now suppose that at the end of the year, Oceanaire had produced 525,000 units but had only sold 485,000 units and
that inventories now contained 40,000 units more than they had at the beginning of the year. At $225 each, that means
that the firm added $9,000,000 in new inventory.
This year Oceanaire actually invested $. (Enter your response as an integer.)
Oceanaire planned to invest $(Enter your response as an integer.)
Oceanaire…
Chapter 5 Solutions
PRINCIPLES OF MACROECONOMICS(LOOSELEAF)
Knowledge Booster
Similar questions
- Gita is an auto mechanic and runs a small repair shop. She hires one mechanic at $20,000 per year, pays a monthly rent of $5,000 towards the lease of the premises where her repair shop is located, and spends $20,000 per year on materials needed for repairing cars and trucks. She has invested $40,000 of her own savings in heavy equipment (air and strut compressors, brake lathes, heavy-duty lifts etc.) that could earn her $4,000 per year if invested elsewhere. She has been offered $40,000 per year by a competitor to work as a mechanic for them and she estimates the value of income she could earn in her spare time to be $5,000. The repair shop's total annual revenue is $250,000. What is Gita's yearly fixed cost in dollars? what is Gita's yearly variable cost in dollars? what is Gita's yearly explicit cost? what is Gita's yearly implicit cost? what is Gita's accounting profit? and what is Gita's yearly economic profit? and finally is Gita making the best use of her resources (time and…arrow_forwardCase C: Galaxy Multinational. Galaxy, a multinational corporation, has two plants, one in the United States and the other in Mexico, and it cannot change the size of the plants or the amount of capital equipment in the short run. The wage in Mexico is equivalent to US $5 per hour. The wage in the U.S. is $25 per hour. Given current employment situation, the productivity per worker in Mexico is 200 units per hour, and the productivity per worker in the U.S. is 400 units per hour. Is Galaxy maximizing output relative to its labor cost? If not, what should Galaxy do? Justify your answer.arrow_forwardSuppose that you are running a business, and you need some extra space for one year. Your bank offers you a loan of $200,000 at 0% interest. You consider borrowing this amount to buy the building, use it for one year, and then sell the building to pay back the loan. Unfortunately, the economy in which you are operating is experiencing deflation at the rate of 10% per year. After one year, you should be able to sell the building for___________. Suppose that owning the building for a year would earn you $12,000. To decide whether you will be better off by owning it for one year and then selling it, you seek advice from three different people: (1) Your brother says that you should not buy the building because in one year it will cost you $200,000. (2) Your accountant says that you should definitely buy the building because you can borrow $200,000 at zero interest while the building will generate $12,000 in extra income. Then when you sell it, you will be $12,000 richer. (3) Your…arrow_forward
- Suppose that before you began your college application process, you were offered a job to work as a floor-trainer at a local fitness center, accompanied by a yearly salary of $27,000 (after taxes). Assume however that you decided to turn down this offer and instead attend a year of college. The total monetary cost of the year of college, including tuition, fees, and room and board expenses, is $43,000. You likely chose to attend college because Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forwardGerry works 40 hours a week managing Gerry's Market, without drawing a salary. He could earn $600 a week doing the same work for Jean. Gerry's Market owes its bank $100,000, and Gerry has invested $100,000 of his own money. If Gerry's accounting profits are $1,000 per week while the interest on his bank debt is $200 per week, his economic profits are: $400 per week. $800 per week. $200 per week. $1200 per week. $0 per week.arrow_forwardEduardo, a teacher, earned $40,000 as his annual salary from his employer in 2018. But in 2019 he decided to quit that job and start his own business: manufacturing skateboards. Here's what he did to accomplish it: Stopped renting out his grandparents' cottage (for $8,000 a year) and used it as his factory instead. .He spent $60,000 on materials and utility bills. He got that money from his savings account, which was earning 5% annual interest. • He leased machines for $10,000 a year and paid $15,000 in wages. He sold $135,000 worth of skateboards. Eduardo's accounting profit is but his economic profit is O160,000; 85,000 141,000; 160,000 O-1000; 50,000 50,000; -1000arrow_forward
- H6. Your mother owns and runs an arts and craft store, and the business is doing well. She would have otherwise been employed as a high school geography teacher making $80,000 a year or as an interior decorator making $68,000 a year. She owns the building in which her shop is located, which she could have rented out for $24,000 a year. Her annual revenue from the shop is $430,000 and she employs four workers, each of whom earns $30,000 a year. On average, she spends $206,000 per year traveling, purchasing, and shipping unique merchandise for resale at her store. Based on this information, do you think you should encourage her to return to teaching? Explain your advice with the help of calculations on her opportunity costs, accounting profit, and economic profit.arrow_forwardOn September 28, 2012. The Wall Street Journal reported that in the second quarter, the number of cellphone subscribers on contract plans rose just 0.7% from the year before, to 219 million, according to UBS AG. The number of prepaid customers grew about 11.7% to 71 million. How many prepaid customers were there in the second quarter of 2011?arrow_forwardEconomy 1. Pamela worked as an auditor earning $60,000 per annum. She decided to open her own consultancy business. For her business, she rents an office where she pays $2,000 per annum. Further, her utility expenses are $300 per annum and she hired a part-time secretary to whom she pays $25,000 per annum. To start her business, she borrowed $40,000 from her savings, where she was earning an interest of $500 per annum. In her first year, her business earned a revenue of $300,000. Based on this information, calculate the following: a. Total implicit costs per annum b.Total explicit costs per annum c.Total accounting costs and accounting profit for that year d.Total economic costs and economic profit for that yeararrow_forward
- 1 ) On January 1, 2026 each of Boblandia's 100 workers has $1 in physical capital. Over the course of the year, its physical capital depreciates by 5%, and the number of workers increases by 5%. How much does Boblandia have to invest in 2026 to make sure that its capital to labour ratio is the same on January 1, 2027 as it was on January 1, 2026arrow_forwardCrusoe will live this period and the next period as the lone inhabitant of his island. His only income is a crop of 100 coconuts that he harvests at the begin- ning of each period. Coconuts not consumed in the current period spoil at the rate of 10 percent per period. (LO5) a. Draw Crusoe’s intertemporal budget constraint. What will be his consump- tion in each period if he regards future consumption as a perfect, one-for- one substitute for current consumption? b. What will he consume each period if he regards 0.8 unit of future consump- tion as being worth 1 unit of current consumption?arrow_forwardTime left 1:11:57 In 2009, Corny Company grows and sells $2, million worth of corn to Tasty Cereal Company, which makes corn flakes. Tasty Cereal Company produces $6 million worth of corn flakes in 2009, with sales to households during the year of $4.5 million. The unsold $1.5 million worth of corn flakes remains in Tasty Cereal Company's inventory at the end of 2009. The transactions just described contribute how much to GDP for 20097 Select one: $6 million Ob. $8 million $6.5 million d. $45 mition. Next page us page Rour on this page O Type here to search |道arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Managerial Economics: Applications, Strategies an...EconomicsISBN:9781305506381Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. HarrisPublisher:Cengage Learning
Managerial Economics: Applications, Strategies an...
Economics
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:Cengage Learning