Description

College of Administrative and Financial Sciences

Assignment- 2

Deadline: 02/03/2020 @ 23:59

Course Name: Macroeconomics

Student’s Name:

Course Code: ECON201

Student’s ID Number:

Semester: II

CRN:

Academic Year: 1440/1441 H

For Instructor’s Use only

Instructor’s Name:

Students’ Grade: ?/30

Level of Marks: High/Middle/Low

Instructions – PLEASE READ THEM CAREFULLY

• The Assignment must be submitted on Blackboard (WORD format only) via

allocated folder.

• Assignments submitted through email will not be accepted.

• Students are advised to make their work clear and well presented, marks may be

reduced for poor presentation. This includes filling your information on the cover

page.

• Students must mention question number clearly in their answer.

• Late submission will NOT be accepted.

• Avoid plagiarism, the work should be in your own words, copying from students or

other resources without proper referencing will result in ZERO marks. No exceptions.

• All answered must be typed usingTimes New Roman (size 12, double-spaced) font.

No pictures containing text will be accepted and will be considered plagiarism).

• Submissions without this cover page will NOT be accepted.

Problem 1 (15 marks)

Below,youare provided withthe demand andsupplycurvesfort-shirts and the worldprice ofatshirt.You will usethis information to identifywhether the countryimports orexportstshirts.You will alsoexamine the impact ofa tariffon theamountofconsumer

andproducersurplusthatresults inthis market.

1. Supposethattheworldprice of at-shirt is $20.Does this country import orexport tshirts? Howmany?

2. Supposethatthis country engages intrade.

a) Calculate the amountofconsumer surplusthatresults inthis market.

b) Calculate the amountofproducer surplusthatresults inthis market.

3. Supposethatthe government imposes a $10import tariffon t-shirts.

a) Howmany t-shirts do domestic consumers purchaseafterthis import tariffis

imposed?

b) Howmany t-shirts do domestic suppliers sell after this import tariffis imposed?

c) Howmany t-shirts does this countyimport?

d) Calculate the amountofconsumer surplusthatresults in this market.

e) Calculate the amountofproducer surplusthatresults in this market.

f) Calculate the amountof government tax revenue generatedbythe import tariff.

g) Calculate the amountof deadweight loss that results fromthe imposition ofthe

tariff.

Problem 2 (5 marks)

Below,youare provided withthreeyears ofdataonthe quantities thatare producedoftwo

goodsandthe market price ofeach.You will use this data to calculateNominal GDP

andReal GDP.

Bananas andMangoare producedinPhilippines. Manyother final goodsandservices are

producedinPhilippines,but we will assume that Bananas andMango are the only two final

goods producedinthis country.Thetable below provides the number ofbananas

andmangothat are producedin Philippinesin threedifferentyears.The table also provides the

price of a banana andthe price of a mango ineach year.

Year

2015

2016

2017

Quantity of

Price of

Quantity of

Price of

Bananas

Bananas

Mango

Mango

1,200

1,260

1,290

$0.75

$0.80

$1.00

600

620

650

$10.00

$10.50

$11.00

1) Whatis the value ofNominal GDP inPhilippinesin 2015, 2016 and 2017?

2) Treating 2015as the baseyear,calculate the value ofReal GDP in Philippinesin2015,

2016 and 2017?

Problem 3 (10 marks)

Below,youare provided withtwoyears of data on the quantitiesoftwo goods that the

average,urbanfamilyof four consumesandthe marketprice of each.You will use thesedata to

calculate the Consumer Price Index (CPI) andinflation rate.

Cheese andChocolateare two goods thatare consumed in Holland.Manyother final goods

andservices areconsumedinHolland,butforsimplicity,we will assume that Cheese

andChocolateare the onlytwo final goodsconsumed inthe country.The table belowprovides the

quantity of Cheese andChocolatethatare consumedbythe average,urbanfamilyoffour

inHollandin two differentyears.The table also provides the price of a Cheeseandthe price of

chocolate ineach year.

Year

2016

2017

Quantity of

Chocolate

Price of

chocolate

Quantity

of Cheese

150

165

€10.50

€13.00

45

52

Price of

cheese

€15.00

€17.00

Supposethat2016is the baseyear.

1) Calculate the CPI in 2016 and 2017.Round your answer tothe nearest onehundredth.

2) Calculate the 2017inflationrate.Round your answer tothe nearest one-tenthof one

percent.

Answer:

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