Question;Part I. Short Answer (5 Points Each)________ PointsCarefully define, explain the usage, and an example of the following concepts:1. Distinguish between demand and quantity demanded. Do the same for supply andquantity supplied.The difference between demand 6332.3.Describe the field of economics known as microeconomics.What is the cost-benefit principle?2Part II. Fully Explain in Essay Format (20 Points) ________ PointsGraphically prove or disprove the following statement. Explain your reasoning. Afterlast years strike, baseball has experienced a severe drop in attendance even though theowners have reduced ticket prices and have held special events. Similarly players havemade themselves more available in the hopes of boosting attendance. So far nothing hasworked. In economic terms the law of demand does not hold since attendance at themajor league parks has dropped while at the same time ticket prices have fallen.3Part III. Matching (30 Points).________ Points_____Market Demand_____Graphs_____Negative_____Positive_____Supply Side_____Vertical_____Variable_____Resources_____Opportunity Cost_____NecessityA.The _________________curve shows the relationship between the priceand the quantity demanded by all consumers, everything else being equal.B.On the __________________ of a market, producers indicate to consumerswhat they are willing to sell, in what quantity and at what price.C. Inputs in production processes are called Economic ______________.D. Toothpaste is likely to be a ____________ product.E.A line that falls from left to right has a _________________ slope.F.In the Marshallian diagram, the ________________ axis denotes Price.G. The ________________________ of any decision is the forgone value ofthe next best alternative that is not chosen.H.There is a ___________________ relationship between two variables ifthey move in the same direction.I. _________________ are valuable because they facilitate interpretation ofdata.J.A _______________ measures something that can take on different values.4PartIV.Completethefollowing(20Points)SupposethetotaldemandforalfalfaandthetotalsupplyofalfalfapermonthintheDallasgrainmarketareasfollows:ThousandsThousands AmountofSurplus(+)ofBushelsPriceperofBushels orDemandedBushelSupplied85$3.4072803.7073754.0075704.3077654.6079604.9081(a)Shortage()Whatwillbethemarketequilibriumprice?Whatistheequilibriumquantity?Usingthesurplusshortagecolumn,explaininwordswhyyouranswerisvalid.(b)Whatisthesurplusorshortageatthepriceof$3.40?Whatisthesurplusorshortageattheprice$4.90.5Part V. AssumethatthedemandforacommodityisrepresentedbytheequationP=10.2QdandsupplybytheequationP=2+.2Qs,whereQdandQsarethequantitydemandedandquantitysupplied,respectively,andPistheprice.UsingtheequilibriumconditionQs=Qd.(HintSettwoequationsequaltoEachotherandsolve.)(15Points)(a)Solvetheequationssimultaneouslytodeterminetheequilibriumprice.Replacetheequilibriumpricebackintoeitherofthetwoequationsanddetermineequilibriumquantity.(b)Describethegraphthetwoequations,includingequilibriumpriceandquantity,tosubstantiateyouranswer.6Part VI. Multiple Choice (5 Points Each)Exhibit 5-21. Refer to Exhibit 5-2. The market for good X is initially in equilibrium at $5. The government thenplaces a tax on the producers of good X-in effect, taxing them on each unit of good X they sell.As a result, the supply curvea. shifts (down and) rightward from S2 to S1.b. shifts (up and) leftward from S1 to S2.c. does not shift from S1.d. There is not enough information to answer the question.Exhibit 5-42. Refer to Exhibit 5-4. As a consequence of the depicted change in the supply of X, the demandcurve for Y shifted from D1 to D2. It follows thata. X and Y are substitutes.b. X and Y are complements.c. X and Y are inferior goods.d. demand for Y is price elastic.7Exhibit 4-23. Refer to Exhibit 4-2, which shows supply and demand for freeway space at both 8 a.m. and 11p.m. At a zero money price, there is a ________ of freeway space at 8 a.m. and ________ at 11p.m.a. shortage, a surplusb. surplus, a shortagec. surplus, equilibriumd. shortage, equilibriumExhibit 4-44. Refer to Exhibit 4-4. At a wage of $7, there will be a __________ of unskilled workers equal to__________ thousand.a. shortage, 10b. surplus, 20c. surplus, 10d. shortage, 20e. none of the above85. Refer to Exhibit 4-4. Suppose the minimum wage is set at $5. The result will bea. unemployment.b. labor shortage.c. no effect on the labor market.d. none of the above6. If variable X goes up as variable Y goes down, then X and Y area. directly related.b. inversely related.c. independent.d. positively related.7. The concept that relates how much one variable changes as another variable changes isa. slope.b. line.c. curve.d. graph.8. The coordinates of point 1 are 50 units of X and 40 units of Y. The coordinates of point 2 are 60units of X and 45 units of Y. The slope of the line between points 1 and 2 isa. + 2.00b. + 0.50c. - 0.25d. - 0.50e. none of the above9. When the price of a product increases, a consumer is able to buy less of it with a given money income. Thisdescribes:A. the cost effect.B. the inflationary effect.C. the income effect.D. the substitution effect.10. When product prices change, consumers are inclined to purchase larger amounts of the now cheaperproducts and less of the now more expensive products. This describes:A. the cost effect.B. the price effect.C. the income effect.D. the substitution effect.Table 2QD = 189 - 2.25PQS = 124 + 1.5P11.____________Using Table 2, the equilibrium price is:a.$84b.$82.67c.$17.33d.150912. Using Table 2, the equilibrium quantity sold is:___a.65___b.150___c.313___d.84___e.013. Economic efficiency would be primarily discussed in response to which of the fundamental questions abouta competitive market economy?A. What goods and services will be produced?B. How will the goods and services be produced?C. How will the system promote progress?D. Who will get the goods and services?14. In the circular flow model, households:A. buy products and resources.B. sell products and resources.C. buy products and sell resources.D. sell products and buy resources.15. The basic economic problem is essentially one of deciding how to make the best use of:A. limited resources to satisfy limited economic wants.B. limited resources to satisfy unlimited economic wants.C. unlimited resources to satisfy unlimited economic wants.D. unlimited resources to satisfy limited economic wants.16. From an economic perspective, when a student decides to attend another year of college, the student hasconcluded that the marginal:A. costs of attending college has decreased that year.B. benefits of attending college has increased that year.C. benefits of attending college are greater than the marginal costs.D. costs of attending college will be subsidized by someone else such as parents or the government.17. If both demand and supply increase, the equilibrium quantity___a.increases and the price falls.___b.decreases and the effect on price is indeterminate.___c.decreases and the price rises.___d.increases and the effect on price is indeterminate.1018. The price ratio of the two products is the:A. marginal rate of substitution.B. slope of the budget line.C. point of tangency for equilibrium.D. demand for the two products.Use the graph below to complete the following question(s).19. Refer to the above graph. The total opportunity cost of nine drill presses is:A. 1 unit of bread.B. 2 units of bread.C. 3 units of bread.D. 4 units of bread.20. Refer to the above graph. The marginal opportunity cost of the fourth unit of bread is:A. 1 unit of drill presses.B. 2 units of drill presses.C. 3 units of drill presses.D. 4 units of drill presses.
Paper#55702 | Written in 18-Jul-2015Price : $37