Question

5. Consider a simple economy with two companies: Fresh Juice, and Organic Oranges. Organic Oranges do not sell oranges directly to consumer; rather it supplies its entire harvest to Fresh Juice as an intermediate good. Fresh Juice sells its juice directly to consumers. As juice is perishable, juice produced in Q1 cannot be sold in Q2. Suppose Fresh Juice produced 2,000 gallons of juice in Q1. The two inputs used were oranges, which cost $10,000 total, and labor, which cost $20 per gallon of juice. Organic Oranges's only input is labor, which costs 85,000, total. Fresh Juice sold 1,500 gallons of juice in the first quarter at a price of $40 each. Which of the following correctly matches GDP and total corporate profit in the economy in Q1? A. GDP 70,000; Profit 15,000 B. GDP= 70,000; Profit = 25,000 C. GDP = 60,000, Profit = 15,000 D. GDP 60,000; Profit 25,000 6. Which one of the following production functions exhibits diminishing returns to labor and increasing returns to capital? A. F(K, N)-AK14N9 B. F(K,N) AKo.5No.7 C. F(K,N)-AK"4x1.3 D. F(K, N) AK"3x1.5 7. Suppose a shock hits the economy that abides by a Classical model and you observe the following changes: Overall output increases . Marginal productivity of workers decrease Which of the following could lead to these observations? A. Flood in Minnesota, which destroyed the production facility. B. Invention of personal computers C. A huge lake was drained and new fertile land was revealed D. Immigrants get working visas and join the labor forcc. 8. Consider the labor demand curve from the classical model and the following statements 1. An increase in technology shifts labor demand up 2. An increase in capital shifts labor demand up 3. An increase in the labor supply shifts labor demand down 4. A ten unit change in capital has a larger impact than a ten unit change in technology when it comes to the labor dermand curve Which of the choices below is correct? A. All of the above statements are true B. Statements 1, 2, and 3 are true C. Statements 1, 2, and 4 are true D. Statements 1 and 2 are true

Answer 1

Consider a simple economy with two companies, fresh juice and organic orange. Organic orange do not sell orange directly to customer. (c) profit_total = $ 15,000 & Wage_Total = $ 45,000. Explaination: - wage total = $ (2000 times 20) + $ 5,000 = $ 40,000 + $ 5,000 = $ 45000 Total Revenue by selling 1500 gallons in Q_1 = $(40 times 1500) = $ 60000 profit Total = $ 60,000 - $ 45,000 = $ 15,000