Question 1. The Agrizone Corporation invests $14.014.0 million in a new inventory tracking system.
A. The opportunity cost of Agrizone's decision is the value of leaving the money unutilized.
B. The opportunity cost of Agrizone's decision is the value of the other investments it is pursuing at the same time.
C. The opportunity cost of investing in a new inventory tracking system is any other projects Agrizone could have invested in.
D. All of the above.
E. None of the above.
Question 2. Which of the following statements uses the concept of equity to argue against the legalization of casino gambling?
A. If gamblers are able to gamble at less cost and nongamblers receive the benefits of additional tax revenue, then it is an equitable activity.
B. Legalized casino gambling places an unfair burden on nongamblers, who must now tolerate the increased traffic that the activity necessarily produces.
C. Legalized casino gambling will generate additional tax revenues, which the state can use for gambling addiction programs.
D. All of the above.
Question 3. Use the graphs below to answer the following questions,
A. The slope of the line in graph (a) is equal to:
B. The slope of the line in graph (b) is equal to:
Question 4. Alexi and Tony own a food truck that serves only two items, street tacos and Cuban sandwiches. Alexi and Tony can sell all the street tacos and Cuban sandwiches that they are able to produce.
|
|
Output per Hour
|
|
|
Street Tacos
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Cuban Sandwiches
|
|
Alexi
|
100
|
90
|
|
Tony
|
30
|
50
|
A. Try to draw a production possibility frontier
B. Alexi's opportunity cost of producing one taco is Cuban sandwiches. (Round your response to two decimal places.)
C. Tony's opportunity cost of producing one taco is Cuban sandwiches. (Round your response to two decimal places.)
D. has a comparative advantage in the production of Cuban sandwiches.
E. has a comparative advantage in the production of street tacos.
Question 5. Economists have learned the most important factor in determining an individual's demand for a single product is the relationship between price and quantity demanded. The demand curve depicts the specific relationship between price and quantity demanded. This is known as the law of demand. How do economists define the law of demand?
A. A negative, or inverse, relationship between demand and price.
B. The amount of a product that a household would buy in a given time period if it could buy all it wanted at the current market price.
C. A negative, or inverse, relationship between quantity demanded and price.
D. A positive relationship between price and quantity demanded.
Question 6. In March 2015, hogs in the United States were selling for 81 cents per pound, up from 58 cents per pound a year before. This was due primarily to the fact that supply had decreased during the period. Show this change in the figure on the right.
A. Locate the equilibrium point for 2015 in the U.S. hog market. Label your point 'E'.
B. Illustrate the change in the U.S. hog market between 2014 and 2015. Properly label your line 'S2015'.
Question 7. The rent for 2-bedroom apartments in Detroit has fallen from an average of $796 in September 2014 to $717 in March 2015. Demand for 2-bedroom apartments in Detroit was falling during this period as well. This is hard to explain because the law of demand says that lower prices should lead to higher demand. Do you agree or disagree with this statement?
A. Agree. This is hard to explain because a rise in prices should result in a higher quantity demanded.
B. Disagree. A rightward shift of the demand curve would result in a lower price and a lower quantity demanded.
C. Agree. This is hard to explain because a fall in prices should result in a higher quantity demanded.
D. Disagree. A leftward shift of the demand curve would result in a lower price and a lower quantity demanded.
Question 8. Suppose that the world price of oil is $60 per barrel and that the United States can buy all the oil it wants at this price. Suppose also that the demand and supply schedules for oil in the United States are as follows:
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Price
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U.S. Quantity
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U.S. Quantity
|
|
($ per Barrel)
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Demanded
|
Supplied
|
|
55
|
26
|
14
|
|
60
|
24
|
16
|
|
65
|
22
|
18
|
|
70
|
20
|
20
|
|
75
|
18
|
22
|
A. draw the U.S. supply curve for oil. Properly label your line.
B. draw the U.S. demand curve for oil. Properly label your line.
C. With free trade in oil, what price will Americans pay for their oil?
1) Americans will pay per barrel.
2) At this price, the U.S. demand schedule shows that Americans will buy
million barrels per day and U.S. producers will supply million barrels per day. The remaining demand will be met by importing million barrels from foreign sources.
D. Suppose the United States imposes a tax of $5 per barrel on imported oil. What quantity would Americans buy?
1) At this price, Americans will buy million barrels per day and U.S. producers would supply million barrels. The remaining demand
will be met by importing million barrels from foreign sources.
2) How much tax would the government collect?
• The government would collect $
million tax per day.
• As a result of the oil import tax, who is harmed among the agents?
Question 9. What is the formula to calculate price elasticity of demand?
Question 10. Use the diagrams below to answer the following questions:
A. The slope of left demand curve is
B. The slope of right demand curve is
C. Using point A as the starting point, the percentage change in market price in either diagram is
Question 11. Opportunity Cost
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Labor Hours to make 1 lb of
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Pounds produced in 40 hours
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|
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Meat
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Potatoes
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Meat
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Potatoes
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Farmer
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8
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2
|
5
|
20
|
|
Rancher
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4
|
5
|
10
|
8
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a. What is the opportunity cost of 1 pound of meat for the famer?
b. What is the opportunity cost of 1 pound of meat for the Rancher?
c. What is the opportunity cost of 1 pound of Potatoes for the farmer?
d. What is the opportunity cost of 1 pound of Potatoes for the Rancher?
e. Who has the absolute advantage in meat?
f. Who has the absolute advantage in potatoes?
g. Who has the comparative advantage in Mean?
h. Who has the comparative advantage in Potatoes?
Question 12. Try to fill the table by yourself (Elasticity of Linear Demand Curve)
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Price
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Quantit
y
|
Total Revenue
|
Percentage Change in Price
|
Percentage Change in Quantity
|
Elasticity
|
Description
|
|
$7
|
0
|
$0
|
-
|
-
|
-
|
|
|
$6
|
2
|
$12
|
15%
|
200
|
13.0
|
Elastic
|
|
$5
|
4
|
|
|
|
|
|
|
$4
|
6
|
|
|
|
|
|
|
$3
|
8
|
|
|
|
|
|
|
$2
|
10
|
|
|
|
|
|
|
$1
|
12
|
|
|
|
|
|
|
$0
|
14
|
|
|
|
|
|
13. Assume that there are only two market (Markets for good and services, markets for factors of productions) and two agents (HH and Firms) in this world. Draw the basic circular flow diagram between these agents and markets. You have to distinguish the flow of input and out and the flow of dollars
Justin Bieber Concert Ticket Case
1. The table shows the demand schedule of Justin Bieber's concert ticket. Draw the demand curve for his concert ticket
|
Price of JB's concert ticket
|
Quantity of ticket demanded
|
|
$0.00
|
120
|
|
$0.50
|
100
|
|
$1.00
|
80
|
|
$1.50
|
60
|
|
$2.00
|
40
|
|
$2.50
|
20
|
|
$3.00
|
0
|
2. The table shows the demand schedule of Taylor Swift's concert ticket. Draw the demand curve for her concert ticket
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Price of TS's concert ticket
|
Quantity of ticket demanded
|
|
$0.00
|
20000
|
|
$0.50
|
18000
|
|
$1.00
|
16000
|
|
$1.50
|
14000
|
|
$2.00
|
12000
|
|
$2.50
|
10000
|
|
$3.00
|
8000
|
3. Assume that there exist only two singers in this market. Draw the market demand curve of this market
4. Consider the supply schedule for the Justine Bieber's concert ticket.
|
Price of JB's concert ticket
|
Quantity of ticket Supplied
|
|
$0.00
|
0
|
|
$0.50
|
0
|
|
$1.00
|
30
|
|
$1.50
|
60
|
|
$2.00
|
90
|
|
$2.50
|
120
|
|
$3.00
|
150
|
A. Find out Justin Bieber's concert ticket equilibrium quantity and price using the table. Draw the graph of supply and demand curve of JB and also show the equilibrium on the graph.
B. Now, try to use the numerical method that we learned in the class. Find out the slope of both supply and demand curve and show the equilibrium price and quantity.
5. Continues the JB S&D curve. JB's concert ticket is a normal good
A. Define what is a normal good and inferior good
B. Assume that the average income increases. Show the change of JB's ticket demand curve. What happen?
C. Assume that the ticket price of Taylor swift goes down. As we know that she is the only competitor in this market. What happen to the ticket demand curve of JB?
D. Assume that the ticket price of Serena goes down. What happen to JB's demand curve? (Just assume that her concert ticket is a substitute of JB's concert)
6. Assume that the president Obama wants to give the chance to watch JB's concert to teenagers in the United States and regulate the price to $1.00. Show the result on the graph and describe all the results.