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Homework answers / question archive / Question 1) Suppose that work hours in New Zombie are 300 in year 1 and productivity is $18 per hour worked

Question 1) Suppose that work hours in New Zombie are 300 in year 1 and productivity is $18 per hour worked

Economics

Question 1)

Suppose that work hours in New Zombie are 300 in year 1 and productivity is $18 per hour worked.

a) What is New Zombie's real GDP? $_____________

 

If work hours increase to 320 in year 2 and productivity rises to $20 per hour, what is New Zombie's rate of economic growth?

b) Rate of growth = __________%

 

Question 2:

The per-unit cost of an item is its average total cost (= total cost/quantity). Suppose that a new cell phone application costs $150,000 to develop and only $0.50 per unit to deliver to each cell phone customer.

 

a) What will be the per-unit cost of the application if it sells 100 units

Per-unit cost = $__________

b) What will be the per-unit cost of the application if it sells 1000 units?

Per-unit cost = $__________

c) What will be the per-unit cost of the application if it sells 1 million units?

Per-unit cost = $__________

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1)

a) Computation of Zombie's Real GDP:

Real GDP in year 1 = Working Hours * Productivity = 300*$18 per Hour = $5,400

 

b) Computation of Zombie's Rate of Economic Growth:

Real GDP in year 2 = Working Hours * Productivity = 320*$20 per Hour = $6,400

Rate of Economic Growth = ($6,400-$5,400)/$5,400 = 18.52%

 

2) Per unit Cost = TC/Q

Here,
TC = Total Cost = Fixed Cost + Variable Cost
Fixed Cost = $150,000
Variable Cost = $0.5*Q
Q-quantity

 

a) Computation of Per-unit cost of the application if it sells 100 units:

Total Cost = $150,000+$0.5*100 

= $150,000+$50

Total Cost = $150,050

 

Per Unit Cost = $150,050/100 = $1,500.50

 

b) Computation of Per-unit cost of the application if it sells 1000 units:

Total Cost = $150,000+$0.5*1000 

= $150,000+$500

Total Cost = $150,500

 

Per Unit Cost = $150,500/100 = $150.50

 

c) Computation of Per-unit cost of the application if it sells 1,000,000 units:

Total Cost = $150,000+$0.5*1000000

= $150,000+$500,000

Total Cost = $650,000

 

Per Unit Cost = $650,000/1000000 = $0.65

 

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