Two manufacturers, Take-A-Paws (Paws) and Raise-The-Woof (Woof), each make dog collars and dog leashes, and they each operate 10 hours a day. Paws has 10 workers and Woof has 20 workers. In a given hour, Paws can produce 3 collars or 4 leashes, whereas Woof can produce 7 collars or 5 leashes. Part 1. Indicate whether the following statements are true (T) or false (F) and explain why: A. Since Woof has the absolute advantage in collars, Woof should produce only collars. B. Paws has the absolute advantage in leashes Part 2. The two companies decide to join each other in production and are open to trading with the rest of the world. The world price of a leash in terms of collars is x. Suppose that Paws produces only leashes: check all of the price ranges where all x within that range are feasible (in terms of collars per leash) and explain why:

How do the institutions of the European Union today reflect its historical roots? Or have they left those roots behind?

For a given AD curve, a reduction in the availability of labor or raw materials would cause the short run aggregate supply to shift to the left which would cause prices to fall and output to increase in the short run.

Select one:

True

False

According to the AD/AS model, an economic contraction caused by a leftward shift of aggregate demand remedies itself over time as the expected price level falls, shifting the short run aggregate supply rightward.

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True

False

According to the AD/AS model, if the long-run aggregate supply curve is vertical then the economy will always return to the level of output that occurs when the rate of unemployment is at its natural level.

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True

False

The sticky price theory of short-run aggregate supply says that when the price level falls unexpectedly, some firms will have higher than desired prices which increases their sales.

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True

False

As the United States entered World War II in the early 1940s, the U.S government increased military expenditures that caused the aggregate demand curve in the U.S. to shift to the left and that caused the rate of unemployment to rise to historic levels.

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True

False

How does managed competition, as conceived in the US, differ from that applied in the United Kingdom?

(300 words) No written responses.

According to the AD/AS model, the long-run aggregate supply curve is determined by the availability of labor, capital, natural resources and technology.

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True

False

A decrease in demand would cause the price level to fall and the SRAS to shift to the left.

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True

False

Suppose the economy is in long-run equilibrium. If there is an increase in government spending at the same time that an increase in resources reduces production costs, then in the short-run we would expect real GDP will rise and the price level might rise, fall, or stay the same.

Select one:

True

False

According to the AD/AS model, an increase in the price level with a corresponding reduction in real GDP could be created by natural disasters such as floods, hurricanes, unusually dry weather or pandemics that kill laborers.

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True

False

If the long-run aggregate supply curve shifts right, then the price level will decrease and real output will increase if the aggregate demand curve is stationary.

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True

False

According to the long run money market model, if money supply is growing at 4% in the United States and 5% in the United Kingdom, while real GDP is rising at 2% in the United States, and at 1% in the United Kingdom, what will happen to the nominal exchange rate between USD and British pound? What is the rate of expected depreciation?

A community that is located in a resort area is trying to decide on the parking fee to charge at the town-owned beach. There are other beaches in the area, and there is competition for bathers among the different beaches. The town has determined the following function, which expresses the average number of cars per day q as a function of the parking fee p stated in dollars.
     q = 6000 - 1200p

a) Determine the fee that should be charged to maximize daily beach revenues. $  Blank 1. Fill in the blank,

b) What is the maximum daily beach revenue expected to be? $  Blank 2. Fill in the blank

c) How many cars are expected on an average day?  Blank 3. Fill in the blank, cars

List the properties of indifference curves and explain the intuition behind each property (that is, why must the indifference curve obey this property)?

Suppose your marginal utility for meals at the campus cafeteria this week has fallen to zero. Explain what has happened to your total utility curve derived from consuming these meals. Now explain what will happen to total utility if you eat more meals at the cafeteria this week. Why?

(1) increase the wealth of people holding a fixed quantity of money

(2)reduce the real rate of interest

(3)make domestically produced goods cheaper than those produced abroad

Explain WHY each of the factors that our authors list as those that affect Aggregate Demand and Short Run Aggregate Supply, and Long Run Aggregate Supply can cause those curves to shift.

1. The following table looks at the maximum amount of Televisions and Machines that China and Japan can produce. Assume that the trade-off between Televisions and Machine production in China and Japan is always the same.

1. Draw a production possibilities curve for China and Japan. (Assume that China and Japan produce nothing else except machines and televisions.
2. What is the opportunity cost of producing one more machine in China? In Japan?
3. Identify which country has the comparative advantage in machine production and which country has the comparative advantage in television production.
4. Show how China would benefit from trading with Japan.
5. Show how Japan would benefit from trading with China.

According to the wealth effect and the exchange-rate effect, a decrease in the price level causes the value of money holdings to decrease and net exports to decrease, respectively.

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True

False

The short-run aggregate supply curve (SRAS) is upward sloping due to the stickiness of wages and other input prices because contracts fix some input prices and firms are unable to change the input prices they face as output prices are changing.

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True

False

Suppose the economy is in long-run equilibrium. If there is a reduction of government spending at the same time that a civil war reduces the availability of resources, then, in the short-run we would expect real GDP will fall.

Select one:

True

False

An increase in the price of a major input would cause production costs to rise and the short-run aggregate supply curve would shift to the right.

Select one:

True

False

If state governments decide to build more education facilities and highways, then the AD curve will shift to the right but an increase in Social Security payments by the federal government will cause the AD curve to shift to the left.

Select one:

True

False

What factors could a competent Nigerian government use to foster a greater sense of shared national identity among the people?

What are the factors that tend to divide Nigerian society and cause Nigerians to be, in the words of Nigerian novelist and political activist Chinua Achebe, “among the world’s most unpatriotic people”?