Question

In: Economics

Consider the Grossman model. For each scenario, correctly complete the sentence using the following guidelines: For...

Consider the Grossman model. For each scenario, correctly complete the sentence using the following guidelines:

For the first blank, respond with either “increase” or “decrease”.

For the second blank, insert a number.

For the third blank, respond with either “upward sloping portion”, “downward sloping portion”, or “peak”.

a.) John is deciding how much H and Z to produce. He chooses to increase the time he spends on health by 1 hr per day and this causes the time he spends being sick to fall by 2 hrs per day. As a result of John’s decision, his productive time will ______________ by _____ hours per day. John is on the ________________________________of the H/Z PPF.

b.) Mary is deciding how much H and Z to produce. She chooses to decrease the time she spends on health by 3 hrs per day and this causes the time she spends being sick to increase by 1 hr per day. As a result of Mary’s decision, her productive time will _____________ by _____ hours per day. Mary is on the ________________________________of the H/Z PPF.

Solutions

Expert Solution

a.) John is deciding how much H and Z to produce. He chooses to increase the time he spends on health by 1 hr per day and this causes the time he spends being sick to fall by 2 hrs per day. As a result of John’s decision, his productive time will __Increase____________ by ___1__ hours per day. John is on the ______Upward sloping portion__________________________of the H/Z PPF.

This is because John spends on health by 1 hour per day and due to this time he spends being sick to fall by 2 hors per day which means his productive time will increase by (2-1 =1) hour per day. So he will be on the upward sloping portion of the production possibility frontier.

b.) Mary is deciding how much H and Z to produce. She chooses to decrease the time she spends on health by 3 hrs per day and this causes the time she spends being sick to increase by 1 hr per day. As a result of Mary’s decision, her productive time will ____decrease_________ by __2___ hours per day. Mary is on the _______downward sloping portion_________________________of the H/Z PPF.

In contrast Mary spends 3 hours less per day on health which results in time she spends being sick to increase by 1 hour. It means her productive time will decrease by ( 1-3 = -2) hours. Hence she will be on the downeard sloping portion of the production possibility frontier.


Related Solutions

Complete the following sentence for each of these investors: a. A buyer of call options …...
Complete the following sentence for each of these investors: a. A buyer of call options … b. A buyer of put options … c. A seller (writer) of call options … d. A seller (writer) of put options …
A mature, stable corporation may consider computing their cost of equity using ____. Complete the sentence...
A mature, stable corporation may consider computing their cost of equity using ____. Complete the sentence by selecting the single best available answer from those presented below. Group of answer choices using a Beta of 10 using a Beta of 5 the Capital Asset Pricing Model the Dividend growth model
Complete each sentence, formula or phrase with the answer that best completes the sentence: 6 In...
Complete each sentence, formula or phrase with the answer that best completes the sentence: 6 In a __________________________ acquisition, both the acquirer and the acquired are in the same industry 7 A(n) _________________________is the same as a merger except that an entirely new firm is created. 8 Tax gains are sometimes sited as a reason for a merger. On such tax gain reason is to purchase a company with an NOL. NOL stands for __________________________ 9 _______________________ and ___________________ came...
Question: For each scenario, please complete the following: ●     Explain in writing using economic terms what is...
Question: For each scenario, please complete the following: ●     Explain in writing using economic terms what is happening in the market. ●     Provide a graphical analysis of market activity. For each firm, please provide in writing a strategic plan. Firm 1: Grocery store Scenario 1: I am having quite a few issues throughout the various departments of my store, and I am hoping you can give me your expert advice. For several weeks, our grape shipments have been consistently low. Can you...
Consider the following scenario in a large open economy using the loanable funds model (long run),...
Consider the following scenario in a large open economy using the loanable funds model (long run), suppose there is a technological breakthrough that increases investment demand a. graph and explain what happens to savings, investment , the real interest rate,net capital flows, net exports and the real exchange rate b. compare what happens to the level of investment in a closed conomy to the level of investment in a large open economy
Consider the following scenario and complete the last column and then Assess the sensitivity of the...
Consider the following scenario and complete the last column and then Assess the sensitivity of the price-earnings ratio to changes in the cost of equity capital and changes in the growth rate: Table 9 Estimating price earning(P/E) ratios under various scenarios Scenario Cost of Equity Capital Growth Rate in Earnings P/E Ratio 1 0.13 0.09 2 0.13 0.11 3 0.15 0.09 4 0.18 0.09 5 0.18 0.11
Complete each sentence, formula or phrase with the answer that best completes the sentence: 1 APV...
Complete each sentence, formula or phrase with the answer that best completes the sentence: 1 APV is similar to that of the NPV except that for the levered firm the APV=NPV of the of an unlevered firm + ____________________________________________________ 2 The ______________________approach discounts the aftertax cash flows from a project going to the equity holders of a levered firm using the cost of capital of equity holders in a levered firm. 3 In analysis of our Fed X vs UPS...
Using Grossman model explain what would happen to the demand for health stock.Assume that John was...
Using Grossman model explain what would happen to the demand for health stock.Assume that John was working as a construction worker that is a very physically demanding job (meaning high depreciation rate of health). He was able to find another job in an office that would provide the same income but it is much safer and less physically exhausting meaning that his health depreciation rate is now lower. What would happen to John's demand for health stock? Draw a figure...
Which of the following sentence correctly follow the rules of punctuation? A. The peach’s are ready...
Which of the following sentence correctly follow the rules of punctuation? A. The peach’s are ready for harvest. B. The peaches’ are ready for harvest. C. My son’s peaches are ready for harvest. D. My sons’s peaches's are ready for harvest Extending her arms over the left-field wall, the baseball plummeted toward the fan, and she caught it cleanly on the fly before displaying the home run ball for all to see. Which of the following phrases is misplaced in...
Complete the worksheet according to the following guidelines: In the space provided, write each term’s definition...
Complete the worksheet according to the following guidelines: In the space provided, write each term’s definition as used in ecology. You must define the term in your own words; do not simply copy the definition from a textbook. Provide APA-formatted citations for all paraphrased responses inserted into this worksheet. Every cited work must also have a corresponding reference entry on the References page at the end of this worksheet. In the space provided after each term’s definition, provide an explanation...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT