The above table presents data for the nation of Economica
a. What is the aggregate planned expenditure and unplanned inventory change at each level of real GDP?
b. At what level of real GDP is equilibrium expenditure achieved?
a. When real GDP is $0, aggregate planned expenditure (the sum of C + I + G + X - M) equals $4.5 trillion and unplanned inventory change (the difference between GDP and aggregate planned investment) is -$4.5 trillion. When real GDP is $2.5 trillion, aggregate planned expenditure is $5.5 trillion and unplanned inventory change is -$3.0 trillion. When real GDP is $5.0 trillion, aggregate planned expenditure is $6.5 trillion and unplanned inventory change is -$1.5 trillion. When real GDP is $7.5 trillion, aggregate planned expenditure is $7.5 trillion and unplanned inventory change is $0. And when real GDP is $10 trillion, aggregate planned expenditure is $8.5 trillion and unplanned inventory change is $1.5 trillion.
b. Equilibrium expenditure occurs when unplanned inventory change is $0, or, equivalently, when real GDP equals aggregate planned expenditure. In this problem, equilibrium expenditure occurs when real GDP is $7.5 trillion.
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In the above table, if the market is perfectly competitive and unregulated, at the equilibrium level of output, the marginal social benefit per unit is
A) zero. B) $20 per unit. C) $50 per unit. D) $70 per unit.
The concentration ratio of a monopoly industry is 100 percent
Indicate whether the statement is true or false
Davy's Doggie Daycare rents a warehouse and field for $2,000 a month to house its boarding pooches. Farmer Fred owns the property, he used to use it for farming and made $3,000 a month, but has since retired. What is the cost of the warehouse and field to Davy?
A. It is an implicit cost of $3,000. B. It is an explicit cost of $2,000. C. There is both an explicit and implicit cost totaling $5,000. D. It is an implicit cost of $0.
If the firm can vary all factors of production, it is operating
A. at a profit. B. at a zero economic profit. C. in the long run. D. in the short run.