Question 1: One tradeoff society faces is between efficiency and equality. Elaborate each term with suitable examples. If the government in your country redistributes income from the rich to the poor, analyze with how this action affects equality as well as efficiency in the economy of your country.
Question 2: a. Using the graph shown, analyze the effect a $300 price ceiling would have on the market for ten-speed bicycles. Would this be a binding price ceiling?
b. Using the graph shown, analyze the effect a $700 price floor would have on this market for ten-speed bicycles. Would this be a binding price floor?
c. Why would policymakers choose to impose a price ceiling or price floor?
Question 3: Bob Edwards owns a business. Bob hires an economist who assesses the shape of the business's average total cost (ATC) curve as a function of the number of units produced. The results indicate a U-shaped average total cost curve. Bob's economist explains what makes the ATC U-shaped. Explain the reasons as to why ATC is U-shaped. You are required to use practical reasons related to any business that you are familiar with in explanations.
Question 4: Critically argue whether GDP is a good measure of economic well-being. You are required bring examples and academic references to support your answer.
Question 5: Critically analyze how fiscal policy affects interest rates and aggregate demand. You are required bring examples and academic references to support your answer.