The MorTex Company assembles garments entirely by hand even though a textile ma-

chine exists that can assemble garments faster than a human can. Workers cost $50 per
day, and each additional laborer can produce 200 more units per day (i.e., marginal
product is constant and equal to 200). Installation of the first textile machine on the
assembly line will increase output by 1,800 units daily. Currently the firm assembles
5,400units per day.

3) Identify the immediate effect of each of the following circumstances on U.A.E GDP and its components.

a. Farid buys an Italian sports car.
b. Aziz buys domestically produced tools for his construction company

4) Consider the following data on US GDP:

Year Nominal GDP (billions) GDP Deflator (base year: 2000)
2008 $12,488 119
2007 $11,055 115.5

a. What was the growth rate of nominal GDP between 2007 and 2008?
b. What was the growth rate of the GDP deflator between 2007 and 2008?
c. What was real GDP in 2007 measured in 2000 prices?
d. What was real GDP in 2008 measured in 2000 prices?
e. What was the growth rate of real GDP between 2007 and 2008?
f. Was the growth rate of nominal GDP higher or lower than the growth rate of real GDP? Explain your answer

Eric: do you have a question?

Aklove: Do a little research, then take a shot. What do you think? I or other will be glad to critique your answers.

To determine whether the MorTex Company should install the textile machine or continue with manual assembly, we need to analyze the costs and benefits of each option.

First, let's calculate the current cost of manual assembly. The company currently produces 5,400 units per day, and each additional laborer can produce 200 more units. So, to produce 5,400 units, the company needs 5,400 / 200 = 27 laborers.

The cost of labor is $50 per laborer per day, so the total cost of manual assembly is 27 laborers * $50 = $1,350 per day.

Now, let's calculate the cost and benefits of installing the textile machine. The machine has a production capacity of 1,800 units per day. By installing the machine, the company can increase its daily output from 5,400 units to 5,400 units + 1,800 units = 7,200 units.

The cost of installing the machine is not given in the information provided. To make a decision, we need to compare the cost of installing the machine with the cost savings from using the machine.

If we continue with manual assembly, the cost per unit is $1,350 / 5,400 units = $0.25 per unit.

If we install the machine, the cost per unit will depend on the installation cost. Let's assume the installation cost is $2,000.

The cost per unit with the machine will be the sum of the installation cost divided by the additional units produced: $2,000 / 1,800 units = $1.11 per unit.

Comparing the cost per unit, the cost with manual assembly is $0.25 per unit, while the cost with the machine is $1.11 per unit.

Therefore, based on these calculations, it is not economical for the MorTex Company to install the textile machine.