Economics Assignment: Macroeconomics and Microeconomics

Running head: ECONOMICS ASSIGNMENT
ECONOMICS ASSIGNMENT
Name of the university
Name of the student
Author Note

1ECONOMICS ASSIGNMENT
Table of Contents
Macroeconomics:.............................................................................................................................2
Answer 1:.....................................................................................................................................2
Answer 2:.....................................................................................................................................3
Answer 3:.....................................................................................................................................6
Answer 4:.....................................................................................................................................7
Answer 5:...................................................................................................................................10
Microeconomics:...........................................................................................................................13
Answer 1:...................................................................................................................................13
Answer 2:...................................................................................................................................13
Answer 3:...................................................................................................................................16
Answer 4:...................................................................................................................................21
Answer 5:...................................................................................................................................23
References:....................................................................................................................................24

2ECONOMICS ASSIGNMENT
Macroeconomics:
Answer 1:
Calculation of nominal GDP of the years 2013 and 2017:
Nominal GDP2013= (100*10) + (350*4) + (250*20)
 Nominal GDP2013= 1000 + 1400 + 5000
 Nominal GDP2013= 7400
Therefore, Nominal GDP of the year 2013 is $ 7400
Nominal GDP2017= (150*16) + (230*7) + (150*25)
 Nominal GDP2013= 2400 + 1610 + 3750
 Nominal GDP2013= 7760
The Nominal GDP of 2017 is $ 7760
Calculation of real GDP of the years 2013 and 2017, assuming 2013 as base year:
Real GDP2013= (100*10) + (350*4) + (250*20)
 Real GDP2013= 1000 + 1400 + 5000
 Real GDP2013= 7400
The Real GDP in 2013 is $ 7400. The value of Real GDP and nominal GDP is equal.
Real GDP2017= (150*10) + (230*4) + (150*20)
 Real GDP2017= 1500 + 920 + 3000

3ECONOMICS ASSIGNMENT
 Real GDP2013= 5420
The Real GDP in 2017 is $ 5420.
Nominal GDP of a country implies the aggregate amount of total output corresponding to
its price level for current year. In Jupiter, three products are produced. These are cloths, rice and
shoes. The amount of total production and corresponding price level has changed between 2013
and 2017. For each product, per unit price has increased (Trinh 2017). This implies that the
country has faced inflation. On the other side, quantity of each output does not increase.
However, due to increasing amount of price, the value of nominal GDP has increased compare to
that of 2013.
Real GDP, on the other hand, measures the actual impact of inflation or deflation. In
other words, real GDP shows the abstracts changes within price level that arises due to inflation
or deflation. Here, real GDP of both 2013 and 2017 are calculated (Feldstein 2017). As 2013 is
taken as base year, the real value and nominal value of that year are same, that is, $ 7400.
However, the value of real GDP for the year 2017 becomes $ 5420. This shows that the real
value of GDP has declined due to low production.
Answer 2:
a) The table below is showing that how an additional number of worker can assemble more
television in a day. Marginal product implies the change in output, which occurs when an
additional unit of input is employed (Tschopp 2017). Here, the selling price of each television is
$ 550 and non-wage cost is $ 300 per unit. Hence, the value of marginal product of each worker
will be $ (550-300) = $250 times the number of additional television assembled.

4ECONOMICS ASSIGNMENT
Number of workers Television assembled
per day
Marginal product for
each worker
Value of marginal
product for each
worker
1
2
3
4
5
22
40
54
64
70
22
(40-22)= 18
(54-40)= 14
(64-54)= 10
(70-64)= 6
$ ( 22*250)= $5500
$ ( 18*250)= $4500
$ ( 14*250)= $3500
$ ( 10*250)= $2500
$ ( 6*250)= $1500
b) Labour demand curve foe Alex’s television is explained by the value of marginal product of
workers (VMPw) curve.
Number of workers VMPw or wage ($ per day)
1
2
3
4
5
5500
4500
3500
2500
1500
c) When the selling price of television becomes $ 750 each, then the new value of marginal
product of each worker will be $ (750-300) = $450 times of their individual marginal product
(Tschopp 2017). Hence, the table of part b will be as follow:
Number of workers VMPw or wage ($ per day)

5ECONOMICS ASSIGNMENT
1
2
3
4
5
( 22*450)= 9900
( 18*450)= 8100
( 14*450)= 6300
( 10*450)= 4500
( 6*450)= 2700
d) If productivity of worker increases by 50% then new marginal product of each worker will be
changed (Mankiw 2014). Moreover, the new value of marginal product of each worker will be $
(600-300) = $300 times of their individual marginal product.
Number of workers Television assembled
per day
Marginal product for
each worker
Value of marginal
product for each
worker
1
2
3
4
5
22 + (50 % of 22) = 33
40 + (50 % of 40) = 60
54 + (50 % of 54) = 81
64 + (50 % of 64) = 96
70 + (50 % of 70) = 105
33
(60 - 33)= 27
(81 - 60)= 21
(96 - 81)= 15
(105 - 96)= 9
$ (33*300)= $9900
$ ( 27*300)= $8100
$ ( 21*300)= $6300
$ ( 15*300)= $4500
$ (9*300)= $2700
Hence, the table of part b will be as follow
Number of workers VMPw or wage ($ per day)
1
2
9900
8100