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.
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