For the coming year, Paladin Inc. anticipates fixed costs of $\$120,000$, a unit variable cost of $\$60$, and a unit selling price of $\$90$. The maximum sales within the relevant range are $\$900,000$.

Compute the maximum possible income from operations.

The country of Androde is currently using Method 1 for its production function. By chance, scientists stumble on a technological breakthrough that will enhance Androde's productivity. This technological breakthrough is reflected in another production function, Method 2. The accompanying table shows combinations of physical capital per worker and output per worker for both methods, assuming that human capital per worker is fixed.

$$\begin{array}{ccccc} {\text { Method 1 }} & & {\text { Method 2 }} \\ { 1 - 2 }& { 4 - 5 } \begin{array}{c} \text { Physical capital } \\ \text { per worker } \end{array} & \begin{array}{c} \text { Real GDP } \\ \text { per worker } \end{array} & & \begin{array}{c} \text { Physical capital } \\ \text { per worker } \end{array} & \begin{array}{c} \text { Real GDP } \\ \text { per worker } \end{array} \\ \hline 0 & 0.00 & & 0 & 0.00 \\ \hline 50 & 35.36 & & 50 & 70.71 \\ \hline 100 & 50.00 & & 100 & 100.00 \\ \hline 150 & 61.24 & & 150 & 122.47 \\ \hline 200 & 70.71 & & 200 & 141.42 \\ \hline 250 & 79.06 & & 250 & 158.11 \\ \hline 300 & 86.60 & & 300 & 173.21 \\ \hline 350 & 93.54 & & 350 & 187.08 \\ \hline 400 & 100.00 & & 400 & 200.00 \\ \hline 450 & 106.07 & & 450 & 212.13 \\ \hline 500 & 111.80 & & 500 & 223.61 \\ \hline \end{array}$$

Using the data in the accompanying table, draw the two production functions in one diagram. Androde's current amount of physical capital per worker is 100 using Method 1. In your figure, label that point A.

In the accompanying diagram, the economy is in long-run macroeconomic equilibrium at point $E_1$ when an oil shock shifts the short-run aggregate supply curve to $S R A S_2$. Based on the diagram, answer the following questions.

How do the aggregate price level and aggregate output change in the short run as a result of the oil shock? What is this phenomenon known as?

Using aggregate demand, short-run aggregate supply, and long-run aggregate supply curves, explain the process by which each of the following government policies will move the economy from one long-run macroeconomic equilibrium to another. Illustrate with diagrams. In each case, what are the short-run and long-run effects on the aggregate price level and aggregate output?

There is an increase in taxes on households

The economy is in short-run macroeconomic equilibrium at point $E_1$ in the accompanying diagram. Based on the diagram, answer the following questions.

Is the economy facing an inflationary or a recessionary gap?

Explain whether the following government policies affect the aggregate demand curve or the short-run aggregate supply curve and how.

The government reduces the minimum nominal wage.

For the coming year, Paladin Inc. anticipates fixed costs of $\$120,000$, a unit variable cost of $\$60$, and a unit selling price of $\$90$. The maximum sales within the relevant range are $\$900,000$.

What is the main advantage of presenting the cost-volume-profit analysis in graphic form rather than equation form?

For the coming year, Paladin Inc. anticipates fixed costs of $\$120,000$, a unit variable cost of $\$60$, and a unit selling price of $\$90$. The maximum sales within the relevant range are $\$900,000$.

Estimate the break-even sales (dollars) by using the constructed cost-volume-profit chart.

For the coming year, Paladin Inc. anticipates fixed costs of $\$120,000$, a unit variable cost of $\$60$, and a unit selling price of $\$90$. The maximum sales within the relevant range are $\$900,000$.

Construct a cost-volume-profit chart.

How do unions affect the natural rate of unemployment?

How will the following changes affect the natural rate of unemployment?

The government reduces the time during which an unemployed worker can receive benefits.

A country's labor force is the sum of the number of employed and unemployed workers. The accompanying table provides data on the size of the labor force and the number of unemployed workers for different regions of the United States.

a. Calculate the number of workers employed in each of the regions in July 2015 and July 2016 . Use your answers to calculate the change in the total number of workers employed between July 2015 and July 2016.

b. For each region, calculate the growth in the labor force from July 2015 to July 2016.

c. Compute unemployment rates in the different regions of the country in July 2015 and July 2016.

d. What can you infer about the fall in unemployment rates over this period? Was it caused by a net gain in the number of jobs or by a large fall in the number of people seeking jobs?

The consumer price index, or CPI, measures the cost of living for a typical urban household by multiplying the price for each category of expenditure (housing, food, and so on) times a measure of the importance of that expenditure in the average consumer's market basket and summing over all categories. However, using data from the consumer price index, we can see that changes in the cost of living for different types of consumers can vary a great deal. Let's compare the cost of living for a hypothetical retired person and a hypothetical college student. Let's assume that the market basket of a retired person is allocated in the following way: $10 \%$ on housing, $15 \%$ on food, $5 \%$ on transportation, $60 \%$ on medical care, $0 \%$ on education, and $10 \%$ on recreation. The college student's market basket is allocated as follows: $5 \%$ on housing, $15 \%$ on food, $20 \%$ on transportation, $0 \%$ on medical care, $40 \%$ on education, and $20 \%$ on recreation. The accompanying table shows the May 2016 CPI for each of the relevant categories.

| | CPI May 2016 | | | :--- | :--- | | Housing | 242.8 | | | Food | 248.0 | | | Transportation | 194.6 | | | Medical care | 460.5 | | | Education | 246.9 | | | Recreation | 117.2 | |

Calculate the overall CPI for the retired person and for the college student by multiplying the CPI for each of the categories by the relative importance of that category to the individual and then summing each of the categories. The CPI for all items in May 2016 was 239.4. How do your calculations for a CPI for the retired person and the college student compare to the overall CPI?

Which of the following foods would all vegetarians refuse to eat? (a) Eggs, (b) Milk, (c) Chicken, (d) Bread.