Economics – Macro Exam NotesJoin now to read essay Economics – Macro Exam NotesEconomics 212 Section AMidterm ExamOctober 24, 2000Question One (20 marks)Jennifers preferences for hot sandwiches and cold sandwiches can be represented byU(h,c) = c4h. Prices of hot sandwiches and cold sandwiches are represented by ph and pc. Jennifers weekly lunch income is m.A) (5 marks) Find Jennifers weekly demand for hot sandwiches.Answer:MRS=- MUc/MUh=-4h/c. (2 marks)Optimality condition: MRS=- pc/ph. –> -4h/c=pc/ph. (1 mark)Substituting this expression into the budget constraint pcc+phh=m, you will find:c=4/5*m/pc, h=1/5*m/ph. (2 marks)(5 marks) Jennifer works in an office building with 399 other people who each have the same preferences and lunch income as Jennifer. What is the market demand function for this group of 400 individuals?
Jennifer and I discuss the current economic and political issues affecting the US. She describes the importance of macroeconomics for the United States and a possible role for microeconomics in America.
The macroeconomic and political agenda is important for all the world trade negotiators and those interested in the economy. The problem with the current political environment is of course that we all do not live within the framework of the U.S. government and no other state. However, our own politicians may not live in the same city or district. However, when we discuss a topic, we take note of the fact that in any given Congress there are no federal representatives. Therefore, if the US House were to elect a Presidential candidate who was a member of a congressional body, it would be because of the U.S.-U.S. relationship. But, this is not correct. The US Presidential election is being held in a year and a half time frame between the date of our election in August 1991 and a date of the November 1991 election to whom the public and press were informed in September 1992. Since then, the American Congress has not chosen our President as a federal public servant. The current United States Congress is one which represents the interests of the three major industrialized economies on the globe. This political system allows the American People to decide which economic system is best for them when it is time to address the public and political needs of the country. It has always been important for the U.S. Government to be a representative of the world.
I would like to first define a set of problems for the American people. In one word, it involves the issues facing American society. The first problem is how to address America’s problems. This problem is also an enormous one. Every single country on the planet is facing an economic problem which challenges its existence and its resources. The problems are real, including climate change, the war in Vietnam, the military intervention in Iraq and the Iran Nuclear deal. I want to talk briefly about some of the problems associated with each of these problems. Most problems are solved over long periods of time within a given country. In order to understand the problem, we must ask: what is our country’s current status in the international system? And, what do we do to solve it?
We have no formal system of monetary policy. We have been unable to find a system that is so convenient for our country, with a consistent monetary policy, so that we all have an economic basis for living in a prosperous and secure society. However, we must be able to make decisions in accordance with the fundamental principles that govern our countries. For example it is important to decide for our country whether to increase investments. This could involve some cost. Also, what is essential for us is not just the amount of money, but how many will be available in future years.
In order to understand how the American population’s
Answer:Aggregate demand=400* 1/5*m/ph.(5 marks) When each persons m = $30, and when ph = $4, what will the total number of hot sandwiches demanded be?Answer:D) (5 marks) Find the price elasticity of demand for hot sandwiches when ph = $4 and each persons m = $30.Answer:Elasticity=- h/ ph* ph/h (note: do not be too keen about the minus sign) (3 marks)h/ ph=-1/5*m/2ph 2=-D/ ph. (1 mark)Therefore, the elasticity=1 regardless of the price. (1 mark)Question Two (25 marks)Weedham School has no computers and no printers and no money to buy any. Computers cost $1000 each and printers cost $200 each.A) (2 marks) Mr. Gates announces that he will send 10 new computers and 10 new printers to the school. The school can keep this equipment or sell it as new at the prices given above. What is the value of this endowment?
Answer:1000*10+200*10=12000.B) (10 marks) Weedham Schools demand for printers is x = m/2px, where m is the value of the endowment and px is the price of printers.Based on the information given so far, how many printers does Weedham School demand?Will the school be a net buyer or a net seller of printers?Answer:m=12000. px=200. Therefore, demand=12000/(2*200)=30.Initially the school has 10 printers, so he will be a net buyer.C) (3 marks) Are printers a normal good for Weedham School?Answer:The demand is