Reference no: EM131651999

1. Consumer X purchases a unit of a normal good for $300. The value-added of this good represents 90% of the perceived benefits. The supplier spends $50 in the production of a single unit.

a. What is consumer's maximum willingness to pay for a unit?

b. How much did the supplier profit from this transaction?

c. How much is the consumer surplus ?

2. A free-trade equilibrium exists in which the United States exports machinery and imports clothing from the rest of the world. The goods are produced with two fac- tors: capital and labor. The trade pattern is the one predicted by the H-O theory. An increase now occurs in the U.S. endowment of capital, its abundant factor.

a. What is the effect on the shape and position of the U.S. production-possibility ?curve? 

b. What is the effect on the actual production quantities in the United States if the ?product price ratio is unchanged? Explain. 

c. What is the effect on the U.S. willingness to trade?

d. Assuming that the U.S. growth does affect the international equilibrium price ratio, ?what is the direction of the change in this price ratio? 

e. Is it possible that U.S. national well-being declines as a result of the endowment ?growth and the resulting change in the international price ratio? Explain.

3. A $4, 600 balance in a tax deferred savings plan will grow to $16, 576.10 in 22 years at 8% per year interest rate. What would be the future worth if the $4, 600 had been subject to a 27% income tax rate. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 6% per year. The future worth would be $. (Round to the nearest dollar)