Econ 122A Problem Set 6 Name(Print)______________________ Due in class on March 14 UCI ID_____________________________ 1. In class, we have talked about the following simple wage equation

wage = α + β female + u , where female is a dummy that is equal to 1 if female, and 0 otherwise. ˆ ˆ Given the OLS estimates α and β for the above model, what are the OLS estimates ˆ ˆ for a model with a male dummy instead of a female dummy, i.e., what are a and b for wage = a + bmale + u ? (Hint: female = 1‐ male)

2. Consider the following model:

log(Y ) = α + β X + δ1 D1 + δ 2 D2 + u , where Y = annual earnings of MBA graduates, X = years of experience, D1=1 if Harvard MBA; =0 otherwise, D2=1 if Wharton MBA; =0 otherwise. (1) What are the expected signs of β , δ1 and δ 2 ? note that earnings are in the log form)? (3) If δ1 > δ 2 , what conclusion would you draw?

(2) How would you interpret δ1 and δ 2 (hint: what is the base group here;

3. Suppose you are interested in learning if there are seasonal patterns in party supply sales in OC, that is, you would like to know if sales in a particular season are significantly different from other seasons. Suppose the following model is estimated:

sales = α + β1 D1 + β 2 D2 + β3 D3 + u ,
where sales is the quarterly party supply sales in thousands of dollars in OC; D1, D2, and D3 are dummies indicating the first, the second, and the third quarter respectively. 1

(1) How would you interpret the estimated intercept and slopes? (2) How would you test if sales in the third quarter are significantly different from those in the fourth quarter? Write down the null hypothesis and decide whether you need to do a t or an F test. (3) How would you test if sales in the first quarter are significantly different ...

...ProblemSet 1
Name:______________________
ProblemSet 1 is to be completed by 11:59 p.m. (ET) on Monday of Module/Week 2.
1. Based on the information provided for the market for video games, answer the following questions.
PRICE
Q DEMANDED
Q SUPPLIED
$50
5
9
$45
7
7
$40
9
5
$35
11
3
$30
13
1
a) Draw and properly label the demand and supply graphs (this means you must label the axes and any lines you include on the graph).
b) What is the equilibrium price and quantity?
b.) PRICE: ______$45_____________ QUANTITY: _____7______________
Now, assume that a new government report claims that video game play stimulates the brain.
c) What will this do to the demand curve? Of the available list of things in the text that causes a change in demand, which best fits here as the cause of the demand shift?
d) What will happen to the equilibrium price and quantity?
c) The demand curve will rise. Changes in consumer taste & preferences.
d) The equilibrium price will rise and the quantity will decrease (the equilibrium point will move up and to the left).
e) P: __RISE_________________ Q: _________DECREASE__________
2. Based on the following information for the state of Montana,
a. Draw the Production Possibilities Curve.
b. Determine the opportunity costs for a move from A to B; B to C; and C to D.
CHOICE
OIL / barrels
WHEAT / bushels
A
5000
0
B
4500
10000
C
2500
20000
D
0
25000
a.)
b.) A to...

...ProblemSet 5
Complete all questions listed below. Clearly label your answers.
1. What impact will an unanticipated increase in the money supply have on the real interest rate, real output, and employment in the short run? How will expansionary monetary policy affect these factors in the long run? Explain.
An unanticipated increase in the money supply will have a significant negative or positive impact on different areas of the economy. Real interest rate will decrease in the short run when money supply increases. When money demand fluctuates, it alters people’s desire for liquid assets which affects prices and reates of return on bonds. With real interest rates, the short run on real output rises above normal levels when there is an increase in money supply. This also affects employment in the short run by lowering it as output increases.
2. How rapidly has the money supply (M1) grown during the past twelve months? State the rate of growth (use http://www.federalreserve.gov/releases/h6/) and the most recent release, use the seasonally adjusted figures. Calculate the rate of growth across the year by taking the (new amount of M1- old amount of M1)/old amount of M1). Given the state of the economy, should monetary authorities increase or decrease the growth rate of money? Explain why.
The money supply has grown steadily in the past twelve months. The rate from May 2014 to May 2015 was 7.8% under the seasonally adjusted figures. Given the...

...Economics 370 Microeconomic Theory ProblemSet6 Answer Key
1) Describe the effects on output and welfare if the government regulates a monopoly so that it may not charge a price above p, which lies between the unregulated monopoly price and the optimally regulate price (determined by the intersection of the firm’s marginal cost and the market demand curve).
As usual, the monopoly determines its optimal output on the basis of MR = MC. Here, however, it cannot charge a price in excess of p*. So, for any output less than Q(p*) (where Q(p) is the demand function) its marginal revenue is p*. On the graph below that gives:
pm p* MR
MC
Demand q
m
q
*
2) The inverse demand curve a monopoly faces is p=10Q-1/2. The firm’s cost curve is c(Q) = 10 + 5Q. Find the profit maximizing price and quantity, and economic profit for the monopoly.
Revenue = pQ = Q(10Q-1/2) = 10Q1/2 MR = 5Q-1/2 MC = 5 Profit maximization implies MR = MC, so 5Q-1/2 = 5, or Q* = 1; p* = 10. Economic Profit = Revenue – Cost = Q × p – c(Q) = 1(10) – (10 + 5Q) Economic Profit = 10 – 15 = -5. So, the monopoly will not produce at all, and will have a profit of zero.
3) The inverse demand curve a monopoly faces is p = 100 – Q. Find the profit maximizing price and quantity, and economic profit if: a) The total cost curve is c(Q) = 10 + 5Q.
p = 100 – Q, R = p × Q = (100 – Q) × Q, so MR = 100 – 2Q. C(Q) = 10 + 5Q, therefore MC = 5. The...

...Learning Team E
1/30/2012
University of Phoenix
ACC 547:
James Enney
22-50
Jack and Jill are owners of UpAHill, and S-corporation. They own 25 and 75 percent, respectively.
a. What amount of ordinary income and separately stated items are allocated to them for years 1 and 2 based on the information above?
Description | UpaHill | Jack 25% | Jill 75% |
Year 1 Income | $ 45,000.00 | | |
Less: | | | |
Dividends | $ 500.00 | | |
Interest Income | $ 2,000.00 | | |
Ordinary business income | $ 42,500.00 | $ 10,625.00 | $ 31,875.00 |
Separately Stated Items: | | | |
Interest Income | $ 2,000.00 | $ 500.00 | $ 1,500.00 |
Dividends | $ 500.00 | $ 125.00 | $ 375.00 |
Total: | $ 45,000.00 | $ 11,250.00 | $ 33,750.00 |
Description | UpaHill | Jack 25% | Jill 75% |
Year 2 Income | $ 134,500.00 | | |
Less: | | | |
Dividends | $ 1,000.00 | | |
Interest Income | $ 2,500.00 | | |
Ordinary business income | $ 131,000.00 | $ 32,750.00 | $ 98,250.00 |
Separately Stated Items: | | | |
Interest Income | $ 2,500.00 | $ 625.00 | $ 1,875.00 |
Dividends | $ 1,000.00 | $ 250.00 | $ 750.00 |
Total: | $ 134,500.00 | $ 33,625.00 | $ 100,875.00 |
The amount of income for year 1 for Jack is $10,625.00 and for Jill it is $33,750.00, separate stated...

...6.2a
The objective of this problem is to found the price charged by Peter.
Firstly, the below table illustrate all P, TR, TC, MR and MC when there is different
Number of member served (Q).
No. of member served (Q)
Price per member(P)
Total revenue (TR)
Total cost (TC)
Profit
Marginal revenue (MR)
Marginal cost (MC)
1
400
400
190
210
400
190
2
380
760
380
380
360
190
3
360
1080
570
510
320
190
4
340
1360
760
600
280
190
5
320
1600
950
650
240
190
6
300
1800
1140
660
200
190
7
280
1960
1330
630
160
190
8
260
2080
1520
560
120
190
9
240
2160
1710
450
80
190
10
220
2200
1900
300
40
190
Profit will be maximized when marginal revenue is equal to marginal cost.
The given information cannot achieve the outcome of marginal revenue is equal to the marginal cost. However, the profit still can be maximized when marginal revenue is larger to marginal cost while these two quantities are very close to each other.
As a result, the profit is maximized when Peter serves 6 members and the price charged by him is $300.
6.2b
It is asked whether the profit can be increased if peter set two different prices to two groups which are adults and children group. If yes, what are the prices?
The profit will increase since group of customers has a different willingness to pay. Peter can set an optimum price to...

... Microeconomics (Fall 2014)
Simon Bowmaker
ProblemSet6
Submit at lecture (Monday, November 10)
Write your answers on separate sheets of paper. Please include:
your name
your recitation teacher’s name
day and time of the recitation
NB: if your recitation takes place on Monday morning, you must submit your assignment to your teacher at the beginning of the recitation.
1. Assume a monopolist faces the following market demand: Q = 100 - 2P. The monopolist’s total cost function is TC = 5+8Q2. What is the monopolist’s profit-maximizing level of output and price?
Answer
Step 1. Derive the MR and MC functions.
Since Q = 100 - 2P, P = 50 – (Q/2)
TR=P*Q=(50-1/2Q)Q=50Q-1/2Q2
MR=dTR/dQ=50-Q
MC=dTC/dQ=16Q
Step 2. Set MR=MC and solve for P*, Q*
MR=MC
50-Q=16Q
Q*=2.94 or 3 (rounded)
P*=50-1/2Q*=50-1/2*3=48.5
2. Assume a monopolist faces a market demand curve P = 130 – 2Q, and has the short-run total cost function TC = 350 + 10Q.
(a) What is the profit-maximizing level of output and price? What are profits?
(b) Graph the marginal revenue, marginal cost, and demand curves.
(a) Step 1. Derive the MR and MC functions.
P 130 – 2Q
TR=P*Q=(130 – 2Q)Q=130Q – 2Q2
MR=dTR/dQ=130 – 4Q
MC= dTC/dQ=10
Step 2. Set MR=MC and solve for P*, Q*, and π.
MR=MC
130 – 4Q=10
4Q=120
Q*=30
P*=130 – 2Q=130 – 2*30=130-60=70
Π=TR-TC=P*Q-TC=70*30-(350 10*30)=2100-650=1450
(b) Deadweight loss is equal to area...

...ProblemSet 1
Macroeconomics, ECON 2123
(Instructor: Partha Sen; TA: Peter Tsui)
------------------------------------------------------------------------------------------------------------------------------------
Posted: Friday, 19 September 2014
Due: 5:00 PM Friday, 26 September 2014
(Submit your homework into the homework collection box outside the department office)
100 marks total
Part I: True/False/Uncertain (20 marks, 4 marks each)
1. GDP is the value of all goods and services produced in the economy during a given period.
2. When disposable income equals zero, consumption equals zero.
3. The multiplier is greater than 1 if T = 0 and G = 0.
4. Paradox of saving occurs when the attempts by people to save more lead to a decline in output and an increase in saving in the short run.
5. When MPC (marginal propensity to consume) increases and investment decreases, goods market equilibrium output increases.
Part II: NATIONAL ACCOUNTS (25 marks)
For Part II, consider an artificial economy and assume the following:
1. Fill in the following table: (6 marks)
year
Output of Rice
Price (per ton of rice)
Nominal GDP
Real GDP
(in 1990 $)
Real GDP
(in 2000 $)
1990
600
1,000
2000
1800
10,000
2001
2,000
10,500
2002
2,200
11,500
2. Find the growth rate of real GDP (using 2000$ as common price) for 2001 and 2002. (Express as percentage change and round to the nearest tenth, i.e., XX.X%, hereafter in Part...

...ProblemSet 1
Complete all questions listed below. Clearly label your answers.
1. The receipts and year of release of the five movies with the largest nominal box office revenues, along with the CPI data of each year are presented below. Assuming that the receipts for each of the movies were derived during their year of release, convert the receipts for each to real dollars for the year 2010 (2010 CPI 230.1). Put the movies in order from largest to smallest real box office receipts and show your calculations for full credit.
Movies
Nominal
Box Office Receipts (millions)
Year Released
CPI in Year Released.
Avatar
$760.50
2009
214.5
Titanic
600.8
1997
160.5
Star Wars
461
1977
60.5
Shrek 2
437.2
2004
188.9
E.T. The Extra-Terrestrial
399.9
1982
96.5
1. Avatar- 214.5 / 230.1 x 760.5 = $708.94 million
2. Titanic- 160.6 / 230.1 x 600.8 = $419.07 million
3. Shrek 2- 188.9 / 230.1 x 437.2 = $358.92 million
4. E.T.- 96.5 / 230.1 x 399.9 = $167.71 million
5. Star Wars- 60.5 / 230.1 x 461 = $129.10 million
2. Classify each of the following as employed, unemployed, or not in the labor force.
a. Juanita has two part-time jobs but hopes to get one full-time job instead.
a. Employed
b. Bob teaches 1 class at the University at night and volunteers 20 hours a week at the hospital.
a. Employed
c. Jaime babysits her younger sister while her mother works.
a. Not in the labor force
d. Emma has submitted...

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