Problem 1: Research shows that after-school jobs are highly correlated with decreases in grade point averages. Those who work 1 to 10 hours earn a 3.0 GPA and those who work 14 hours or more earn on average a 2.6 GPA. Higher GPAs are, however, highly correlated with higher lifetime earnings. Assume that a student earns with present value of $8,000 per year for working part-time (8 hours a week) in college; also, assume that each additional hour of work increases that amount by of $1000, and that the return to a 0.1 increase in GPA increases one’s lifetime earnings with a present value of $80,000. Use the following table to compute the lifetime opportunity cost in terms of present value for working 12 hours a week compare to working 8 hours a week.
|
Hours
|
GPA
|
|
8
|
3.5
|
|
9
|
3.2
|
|
10
|
3
|
|
12
|
2.8
|
|
14
|
2.6
|
Problem 2. Use the following demand data to compute the market demand when the price is $45
|
P
|
D1
|
D2
|
D3
|
|
37
|
20
|
4
|
8
|
|
47
|
15
|
2
|
7
|
|
57
|
9
|
1
|
6
|
|
67
|
5
|
1
|
4
|
Problem 3. Use the following supply data along with the demand data from exercise 2 to determine the market equilibrium price and market equilibrium demand.
|
P
|
S1
|
S2
|
S3
|
|
37
|
1
|
4
|
13
|
|
47
|
2
|
8
|
14
|
|
57
|
9
|
13
|
18
|
|
67
|
9
|
17
|
20
|
Problem 4. Compute the price elasticity of demand from the following data
Problem 5. Use the following data to compute the inflation in 2008 relative to the price of 2007.
|
Year
|
CPI
|
GDP
|
|
2005
|
100
|
345
|
|
2006
|
126
|
349
|
|
2007
|
136
|
424
|
|
2008
|
146
|
526
|
Problem 6. Use the date given in question 5 to compute the percent change in real GDP from 2006 to 2007.
Problem 7. The Bureau of Labor Statistics reported that in May 2007 the total labor force was 152,762,000 of a possible 231,480,000 working-age adults. The total number of unemployed was 6,819,000. From this information, calculate the Unemployment rate.
Problem 8. The price level of a basket of goods in 2006 was $64. The price level of that same basket of goods in 2007 was $68. If 2006 is the base year, what was the Consumer Price Index in 2007?
Problem 9. Compute the equilibrium income if the aggregate expenditures function is AE =300 + .4 Y
Problem 10. Compute the autonomous and induced expenditure from the following data, where AE is the total expenditure and Y is the total income.
|
AE
|
Y
|
|
39.4
|
32
|
|
40.75
|
35
|
|
43.9
|
42
|
|
49.75
|
55
|