Economics Answers

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The following is a part of an article in “The Sports Economics”, October 2010.
Enjoying his best run of pitching in more than two years, the always-controversial
Carlos Zambrano said after winning his ninth game of the
season Wednesday that he will retire when his contract ends after the 2012 season.
Zambrano said:
“This will be my last contract. I won’t be playing anymore. I don’t want to play
anymore. Life is short. Sometimes you miss things with your family.I want to be there any moment for my daughter
and my family.
Who can criticize a man for wanting to spend more time with his family
after his contract runs out especially one as wealthy as Carlos Zambrano?
Zambrano’s decision in the above article can be explained by the “backward-bending labor
supply curve.”
a. By using the budget line, indifference curves, and consumers’ optimal con-
sumption behavior, graphically demonstrate Zambrano’s backward-bending labor supply
curve.

2.

The labor force is generally made up of

A) Employed, Unemployed and retired Workers.
B) All the members of a society.
C) All the members of the society who are at least of 15 years of age.
D) All the members of society who are either employed or unemployed and at least of 15 years of age.

Which one from the given options is not a characteristic of the labor market?

A) The services that are rendered by a labor can only be rented.
B) In employment transactions compared to that of market for commodities Non- pecuniary factors loom larger.
C) In employment transactions, non-pecuniary factors are generally unimportant.
D) Several institutions and regulations does not exist in other markets but are applicable to employment relationships.

Suppose a firm has three inputs: unskilled labor, skilled labor and capital. What happens if there is a decrease in the price of the capital when unskilled labor and capital are substitutes and the skilled labor and capital are complements in production.

A) The effect on the employment of unskilled labor remains ambiguous while the employment of skilled labor increases.
B) There would be a decrease in the employment of both skilled and unskilled labor.
C) There would be a decrease in the employment of unskilled labor while the employment of skilled labor may increase or decrease.
D) There would be an increase in the employment of skilled labor and decrease in the employment of unskilled labor.

What would be the cross-wage elasticity of demand if two products are treated as complements?

A) Positive
B) Negative
C) One
D) Zero

Number of Workers Total Number of Sarees Produced per day
1 5
2 11
3 18
4 26
5 35
6 45
7 56
8 68

Suppose the wage per day is $70 and the sarees are sold for $50 each then how many workers will the firm hire?

A) Four
B) Five
C) Six
D) Seven
E) None of the above

b. The Phillips curve relates inflation and unemployment.
(i) Using the AD/AS model, discuss the changes to the economy that the Phillips curve explains well, and describe under what conditions the Phillips curve fails to explain economic behavior. Include graphs of the Phillips curve and the AD/AS model in your answer.
Answer:

(ii) In the late 1990s, the U.S. economy experienced a period of extremely low inflation and extremely low unemployment. Use the AD/AS model to explain what sort of change in the economy would cause this. Include a graphical analysis in your answer, and provide two examples of what might bring about this event.

Compare and contrast the proposition of the Baumol and Marris theory of firm

(ii) Find the following macroeconomics data on yearly basis covers the period from 2008 to
2018. Arrange these data in the same table and state the source of the data in Switzerland.
 Nominal GDP
 Real GDP
 Inflation rate
 Population
 Unemployment rate
Question
1. Draw a graph base on your data, discuss
(a) The performance of the inflation rate for the period of 2008-2018.
(b) The theoretical model of the inflation.