Short Run in Economics

An economist is building a model to predict the daily output of a specific farm during a single growing season. The model's inputs are the number of workers hired per day and the total acreage of land available for planting. The farm manager can adjust the number of workers daily, but the amount of land owned by the farm is fixed for that season. Within the context of this model for daily output, which element is best described as an exogenous variable?

Analyzing Model Variables

Coffee Shop Profit Model Analysis

When constructing a short-term economic model of a single company's production output, treating the number of factories the company owns as an exogenous variable is an appropriate choice because this factor is determined by forces outside the model's immediate scope and is not expected to change within the short-term timeframe being analyzed.

An economist is creating a model to explain and predict the equilibrium price of gasoline in a single country for the upcoming quarter. For this specific model, match each component to its most likely role.

Evaluating Model Assumptions

When constructing an economic model to analyze the production output of a single factory, a variable whose value is determined by forces outside the model (such as a new government environmental regulation) is treated as a given. This type of input is known as a(n) ________ variable.

A researcher is building a short-run economic model to explain the weekly sales volume of a specific brand of smartphone. The modeler decides to treat the global price of silicon chips (a key component in manufacturing the phone) as an exogenous variable. Which statement provides the best analysis of this decision?

An economist is building a model to predict the average monthly rent for apartments in a city over the next year. A key factor is the supply of new apartments. A new municipal regulation is passed that strictly limits the number of new housing units that can be built. If the economist designs the model to predict the number of new housing units as an outcome that can change in response to rent prices, instead of treating the new regulation as a fixed external constraint, what is the most likely consequence?

Evaluating Model Design Choices