Assignment 1: Supply and Demand in a Global Market
Answer the following questions using examples and applications from the readings. Justify your answers using economic concepts and ideas as they apply. Each response should be between 100-200 words.
Questions:
1. The demand for labor is said to be a "derived" demand. What is the meaning of a derived demand? How does this concept help to determine the demand for labor?
2. What are some of the factors that determine the supply of labor in a market? What significant factors have changed the supply of labor over the last twenty years?
3. How does a firm determine its prices and the quantity of labor required in the resource market during a specific period?
4. Why do income inequalities exist? How are income inequalities measured? How have income inequalities changed from 1980 to the present?
5. What is the role of the U.S. government, in terms of dealing with the problem of income inequalities? What are the arguments, for and against, government involvement in this area?
6. Why do nations trade? What is meant by the concept of "Comparative Advantage"? Could a nation be better off economically, if it practiced an isolation policy?
7. The United States has had a significant trade imbalance for several years. What are the problems associated with having a negative trade balance? What can be done to correct the imbalance?
8. How are exchange rates determined? What is the significance of currency devaluations to the home country? To other countries?
Assignment 2: Market Forms
For this assignment you will do a significant portion of work in MS Excel and import it into an MS Word document for submission. You will use the data below to address Price and Output decisions faced by firms that are not in pure competition. Some numbers may be rounded.
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Table 1
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Output
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Average Fixed cost
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Average Variable Cost
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Average Total Cost
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Marginal Cost
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Price
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Total Revenue
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Marginal Revenue
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0
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$ 345.00
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1
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$ 180.00
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$ 135.00
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$ 315.00
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$ 300.00
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2
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$ 90.00
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$ 127.50
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$ 217.50
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$ 249.00
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3
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$ 60.00
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$ 120.00
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$ 180.00
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$ 213.00
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4
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$ 45.00
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$ 112.50
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$ 157.50
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$ 189.00
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5
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$ 36.00
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$ 111.00
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$ 147.00
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$ 165.00
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6
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$ 30.00
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$ 112.50
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$ 142.50
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$ 144.00
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7
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$ 25.71
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$ 115.70
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$ 141.41
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$ 126.00
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8
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$ 22.50
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$ 121.90
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$ 144.40
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$ 111.00
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9
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$ 20.00
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$ 130.00
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$ 150.00
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$ 99.00
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10
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$ 18.00
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$ 139.50
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$ 157.50
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$ 87.00
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Address the following:
1. Complete Table-1. Summarize your calculations.
2. Prepare a graph showing:
o Average Fixed Costs
o Average Variable Costs
o Average Total Costs
o Marginal Revenue
o Marginal Costs
3. Using the data in the table and on your graph, explain the profit maximizing, or loss minimizinglevel of output.
4. Define a normal profit and an economic profit. Are normal profits being earned in this example? Are economic profits present for this firm in this example? Explain your answers.
5. Given the data in the table and the graph, what type of market structure could this be in the short run? Explain your answers.
6. If the data in Table-1 represents the long run, what type of firm must this data represent? Explain your answers.