PLEASE ANSWER ALL QUESTIONS AND SHOW YOUR WORK IF YOU CAN. THANKS!!
1.The following represents demand for widgets (a fictional product):QD=360?6P+0.003M?2PRQD=360?6P+0.003M?2PR, where PP is the price of widgets, MM is income, and PRPR is the price of a related (fictional) good, the wodget. Supply of widgets is determined by QS=?20+4PQS=?20+4P.
Widgets are a _________, and widgets and wodgets are _____________
2. Assume that
M=$42,000M=$42,000 and PR=$8.00PR=$8.00. The equilibrium price of widgets is
3. The equilibrium quantity of widgets is units.
4.Now assume two events occur: income rises to $46,000 and supply conditions change such that
QS=?34+6PQS=?34+6P. Solve algebraically for the new equilibrium price of widgets after these two changes.
5.Solve algebraically for the new equilibrium quantity of widgets after these two changes.
6.Why are the vast majority of undergraduate students in their early twenties? Economists recognize the association between degrees achieved and income and this relationship should seem to be true regardless of age. Why don’t we often see people in their 30s, or middle-age and older, in college classrooms?
a. Young workers realize they are price-takers in the job market, since they lack experience. They thus presume their opportunity cost of attending college to be positive and are therefore more likely to attend and forgo working for a few years. Older workers realize they are price-makers in the job market, since they usually have years of experience already. They thus presume their opportunity cost of attending college to be negative and are therefore less likely to attend.
b. The opportunity cost of attending college while young is relatively low. A young high school graduate usually does not have sufficient work experience to earn a high income, and so available jobs pay relatively low salaries. Further, the student usually does not have a family or similar obligations that impose a burden on his or her time. The opportunity cost for older workers attending college is usually higher since they usually have more work experience and better-paying jobs, as well as more likely having family obligations bearing on their time.
c. Most people, in their early twenties, realize that they need to take advantage of compound interest and thus want to earn income (and save) as quickly as possible. They realize that their opportunity cost of attending college is high, and thus place a high value on earning a degree. Older workers have fewer years over which to earn interest from saved income, and thus are not as eager to attain their degree. Their opportunity cost of attending college is low, and thus they place a low value on earning a degree.