Microeconomics Concepts – Apple

You will apply important microeconomics concepts toward the competitive strategies of an organization that operates in an industry of your choice. You will evaluate the differences between market structures and identify a group of competitive strategies consistent with the market structure that best aligns with the market in which the organization competes. You will assess how the market structure positively and negatively affects the firm and evaluate the efficacy of the structure’s competitive strategies.

Select an industry. Identify an organization in that industry. You may use the company you used for the Week 3 Learning Team assignment or you may select a new organization. Your selected organization must be submitted for instructor approval.

Identify the market structure in which this organization competes. Clearly indicate why the market structure was decided upon, and how this market structure differentiates from the other alternatives.

• How might the company you selected find itself working with organizations in the same industry that are an oligopoly, perfect competition, monopoly, or monopolistic market structure. Examine the different sectors with an industry and how market structure may vary within those sectors.

Identify three or more competitive strategies of your choice that may be used by the organization to maximize its profits over the long run. Evaluate the efficacy of these strategies in the market structure you identified.

Make recommendations related to the strategies the organization might consider to maximize its profits.

Select one of the following assignment options:

Paper
Write a 1,400- to 1,750- word paper.

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Economics-2 Final Examination

Economics-2 Final Examination

PART-A

Question-1 : Describe the difference between marginal cost and average total cost. Why are both of these costs important to a profit-maximizing firm?

Question-2: Assume that a local bank sells two services, checking accounts and ATM card services. Mr. Donethat is willing to pay $8 a month for the bank to service his checking account and $10 a month for unlimited use of his ATM card. Ms. Beenthere is willing to pay only $5 for a checking account, but is willing to pay $15 for unlimited use of her ATM card. Assume that the bank can provide each of these services at zero marginal cost.
A. If the bank is unable to use tying, what is the profit-maximizing price to charge for a checking account?
B. If the bank is unable to use tying, what is the profit-maximizing price to charge for unlimited use of an ATM card?
C. If the bank is able to use tying to price checking account and ATM service, what is the profit-maximizing price to charge for the “tied” good?
D. How much additional profit does the bank make when it switches to use of a tying strategy to price checking account and ATM service?
E. How much total surplus is generated from using tying to price the checking account and ATM service? How does that compare to the nontied pricing strategy? Which strategy has the largest deadweight loss?

Question-3:  Describe a government created monopoly. Why might one be created? Give an example.

PART-II

Question-1: The consumption of alcohol is often cited as an example of a negative externality. Explain a situation in which the consumption of alcohol would be considered to be a negative externality.

Question-2: Identify each of the following goods as a private good, a common resource, a natural monopoly, or a public good, according to the classification presented in your textbook.
A. A shared apartment
B. A national monument
C. Cable TV

Question-3: Explain the role of opportunity cost in differentiating between economic profits and accounting profits.

Question-4: Let’s assume that a monopolist decides to maximize revenue rather than profit. How does this operating objective change the size of the deadweight loss? If you’re a “benevolent” manager of a monopoly firm and are interested in reducing the deadweight loss of monopoly, should you maximize profits or maximize revenue? Carefully explain your answer.

Question-5: Professional organizations (such as the American Medical Association and the American Bar Association) have actively advocated regulation to restrict the right of professionals to advertise. Describe the economic incentives that might exist for incumbent professionals to restrict advertising.

Question-6: Joe Kelp owns a commercial fishing fleet, and hires a captain for each boat in his fleet. These workers are considered to be part of the crew. In the market for fresh Pacific salmon, Joe is one of thousands of fishermen. Although Joe usually catches a significant number of fish each year, his contribution to the entire salmon harvet is negligible relative to the size of the market. Joe is considered to be a perfect competitor in the output market. If so, explain why his demand curve for labor (crew workers) is downward-sloping, and his supply curve for labor is perfectly elastic at the market wage.

Question-7: Describe the role that diminishing marginal utility plays in the utilitarian argument for redistribution of income.

Question-8: Describe the purpose of antitrust laws. What do they accomplish?

Question-9: What is the effective marginal tax rate of a government antipoverty program that guarantees every family a minimum income? Explain. Why might trying several antipoverty benefits to income level lead to an effective marginal tax rate of greater than 100 percent?

Question-10: Explain the difference between inferior goods and normal goods. As a developing economy experiences increases in income (measured by GDP), what do you predict will happen to the demand for inferior goods?

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Economics MCQ – 50 questions

Question 1
ceiling price of $15 would cause
Select one:
a. A surplus of 800
b. A shortage of 800
c. A surplus of 600
d. A shortage of 600
Question 2
A firm estimated its short-run costs using an average variable cost function of the form
AVC = a + bQ = cQ2 and obtained the following results. Total fixed cost is$1,500.
If the firm produces 20 units of output, what is estimated AVC?
Select one:
a. $48.05
b. $74.05
c. $230.05
d. $242.05
Question 3
A firm estimated it’s short-run costs using an average variable cost function of the form AVC = a + bQ + cQ2 and obtained the following results. Total fixed cost is $1,500
If the firm produces 20 units of output, what is estimated total cost?
Select one:
a. $1,500
b. $1,481
c. $2,981
d. $6,341
Question 4
A firm estimates its long-run production function to be Q = -0.0050 K3L3 + 15 K2L2
Suppose the firm employs 10 units of capital.
At ___________ units of labor, average product of labor begins to dimish.
Select one:
a. 66.67
b. 100
c. 150
d. 350
e. 1500
Question 5
A firm is producing two goods ( X and Y ) that are related in consumption. The demand function for X is: Qd = 80 – 2PX – 12PY
Which of the following pairs of goods might the firm be producing?
Select one:
a. cola and diet cola
b. golf shoes and golf gloves
c. magazines and tennis rackets
d. bran cereal and sugar-frosted corn flakes
e. both A and D
Question 6
A manufacturer has two plants – one in Ohio and one in Tennessee. At the current allocation of total output between the two plants, the last unit of output produced in the Ohio plant added $10 to total cost, while the last unit of output produced in the Tennessee plant added $8 to total cost.
In order to decrease total costs, the firm should…
Select one:
a. Keep all the allocation between plants unchanged
b. Produce all its output in the Tennessee plant
c. Produce all its output in the Ohio plant
d. Switch some output from the Ohio to the Tennessee plant
e. Switch some output from the Tennessee to the Ohio plant
Question 7
A monopolistic competitor is similar to a monopolist in that:
Select one:
a. both earn positive economic profit in the long run.
b. both have market power.
c. both produce the output at which long-run average cost is a minimum
d. A and B.
e. all of the above.
Question 8
A newspaper offers students a discount on the regular subscription rate. The total number f subscriptions is optimal and, at the current prices, the marginal revenue from the last subscription sold to a student is $8, while the marginal revenue from the last subscription sold to a regular customer is $12.
If the magazine sells one more subscription to a regular customer and one less subscription to a student:
Select one:
a. profit will increase $4
b. profit will increase $12
c. profit will decrease $8
d. profit will decrease $12
e. none of the above
Question 9
A radio manufacturer is experiencing theft problems at its warehouse and has decided to hire security guards to reduce the thefts. The firm wants to minimize the net cost of warehouse thefts.
If the cost of a stolen radio us $25, what is the MOST the firm would be willing to pay to hire the first security guard?
Select one:
a. $700
b. $500
c. $250
d. $200
e. None of the above
Question 10
An underallocation of resources occurs when…
Select one:
a. a positive externality in consumption exists
b. a negative externality in production exists
c. marginal private benefit exceeds marginal social benefit
d. All of these will lead to underallocation of resources
Question 11
As a policy option for regulating natural monopoly, marginal cost pricing is desirable because…
Select one:
a. allocative efficiency is achieved
b. price is set equal to the minimum value of long-run average cost
c. consumers pay the lowest possible price that will generate sufficient revenue to cover the costs of the natural monopolist.
d. all of the above
Question 12
Demand: Qd = 600 – 30P Supply: Qs = -300 + 120P Equilibrium price and output are
Select one:
a. P = $2 and Q = 540
b. P = $10 and Q = 300
c. P = $6 and Q = 420
d. P = $3.33 and Q = 500
e. None of the above
Question 13
Economies of scale can arise because
Select one:
a. there is usually a qualitative change in the type of capital equipment employed as the scale of operation increase.
b. common or shared resources can be employed as the scale of operation increases, up to the minimum efficient scale (MES).
c. the cost of purchasing and installing larger machines is usually proportionately LESS than for smaller machines
d. both A and C
e. both B and C
Question 14
If a firm is producing a given level of output in an economically-efficient manner, then it must be the case that…
Select one:
a. it is choosing the lowest-cost method of producing that output
b. this output level is the most that can be produced with the given level of inputs
c. each input is producing its maximum marginal product
d. both A and B
e. both A and C.
Question 15
If the own-price elasticity of demand for a good is -0.6 and quantity demanded decreases by 30%, price must have…
Select one:
a. Decreased by 0.6%
b. Decreases by 18%
c. Increased by 20%
d. Increase by 50%
e. None of the above
Question 16
If the price of a good increases, the income effect
Select one:
a. reinforces the substitution effect if the good is normal
b. offsets the substitution effect if the good is inferior
c. shows the change in the quantity demanded of the good, income held constant
d. A and B
e. None of the above
Question 17
In long-run perfectly competitive equilibrium, economic efficiency is achieved because
Select one:
a. Price equals long-run marginal cost for every firm in the industry.
b. Price equals minimum long-run average cost for every firm in the industry.
c. Price equals average fixed cost for every firm in the industry
d. Both A and B
e. All of the above
Question 18
In the long run…
Select one:
a. a firm is making the optimal input choice when the marginal rate of technical substitution is equal to the input price ratio
b. the expansion path shows how the input marginal products change as the firm’s output level changes
c. all inputs are fixed
d. both A and B
e. both B and C.
Question 19
Marginal utility is the
Select one:
a. relative value of two goods when a utility-maximizing decision has been made
b. change in total utility that results from increasing the amount of a good consumed by one unit.
c. utility obtained from the consumption of all but the last unit of a good
d. change in the amount of a good consumed that increases total utility by one unit
e. none of the above
Question 20
Payoff table
Which cell in the payoff table represents the likely outcome of this advertising game?
Select one:
a. Cell A (Low, Low)
b. Cell C (Low, High)
c. Cell I (High, High)
d. Cell E (Medium, Medium)
e. Cell H (High, Medium)
Question 21
Price leadership…
Select one:
a. is not useful to a dominant firm if it could eliminate all its rivals through a price war
b. is an arrangement in which one firm in the market sets a price that the other firms match
c. occurs when a group of firms agree to limit competitive forces in the market
d. is when a firm makes a non-cooperative decision to raise its price
e. None of the above
Question 22
Private provision of public goods fails to achieve economic efficiency because…
Select one:
a. the free rider problem prevents collection of sufficient revenue
b. the free rider problem causes overproduction of the good
c. the price of the privately supplied public good must exceed zero in order to be allocatively efficient
d. both A and C
e. both B and C
Question 23
Stonebuilt Concrete produces a specialty cement used in construction of roads. Stonebuilt is a price-setting firm and estimates the demand for its cement by the state department of transportation using a demand function in the nonlinear form: Q = a Pb Mc P dR
Where Q = yards of cement demanded monthly, P = the price of Stonebuilt’s cement per yard, M = state tax revenues per capita, and PR = the price of asphalt per yard. The manager at Stonebuilt transforms the nonlinear relation for estimation. The estimation results are presented below:
If the price of asphalt (PR) decreases 15%, the estimated quantity of cement demanded will:
Select one:
a. increase 11.8%
b. decrease 11.8%
c. increase 5.2%
d. decrease 5.2%
e. increase 1.18%
Question 24
Suppose Dave, the owner-manager of Dave’s Golf Academy, earned $200,000 in revenue last year. Dave’s explicit costs of operation totaled $130,000. Dave has a Bachelor of Science degree in civil engineering and could be earning $60,000 annually as a civil engineer.
Select one:
a. Dave’s implicit cost of using owner-supplied resources is $130,000
b. Dave’s economic profit is $70,000
c. Dave’s implicit cost of using owner-supplied resources is $60,000
d. Dave’s economic profit is $10,000
e. Both C and D
Question 25
Suppose that the manager of a firm operating in a perfectly competitive market has estimated the average variable cost function to be:
AVC = 4.0 – 0.0024Q + 0.000006Q2
Fixed costs are $500.
The marginal cost function is:
Select one:
a. MC = 4.0 – 0.0048Q + 0.000018Q2
b. MC = 4.0Q – 0.0024Q2 + 0.000012Q3
c. MC = 4.0 – 0.0012Q + 0.000002Q2
d. None of the above
Question 26
Suppose you operate a sandwich shop and currently have two employees. If you hire a third employee, your output of sandwiches per day rises from 75 to 90. If you hire a fourth employee, output rises to 110 per day. A fifth and sixth employee would cause output to rise to 120 and 125 per day, respectively. Choose the correct statement:
Select one:
a. Diminishing returns set have not yet set in because output is still increases
b. Diminishing returns set in with the hiring of the fourth worker
c. Diminishing returns set in with the hiring of the fifth worker
d. Diminishing returns set in with the hiring of the sixth worker
Question 27
Table showing a demand schedule:
As output increases from 2,100 to 2,700 what is marginal revenue?
Select one:
a. $25
b. $50
c. -$25
d. -$300
e. $75
Question 28
Table showing a demand schedule:
If price falls from $250 to $200, what is the elasticity of demand over this range?
Select one:
a. -0.67
b. -1.0
c. -0.08
d. -1.5
e. -2.0
Question 29
Table showing the probability distribution of payoffs from an activity.
What is the expected value?
Select one:
a. 21
b. 36.5
c. 40
d. 42.5
e. 46.5
Question 30
The equation for demand is…
Select one:
a. P = 6,000 – 60Q
b. P = 60 – 100Q
c. Q = 60 – 0.01P
d. Q = 6,000 – 60P
e. None of the above
Question 31
The estimated demand for a good is
Q = 3,600 – 12P + 0.6M – 2.5PR
Where Q is the quantity demanded of the good, P is the price of the good, M is income, and PR is the price of related good R.
If the price of the good decrease by $10, all else constant, the quantity demanded will ______ by _____ units.
Select one:
a. Increase; 12
b. Increase; 120
c. Increase; 250
d. Decrease; 1.2
Question 32
The estimated demand for a good is
Q = 3,600 – 12P + 0.6M – 2.5PR
Where Q is the quantity demanded of the good, P is the price of the good, M is income, and PR is the price of related good R.
The good is…
Select one:
a. an inferior good since the coefficient on PR is negative
b. a normal good since the coefficient on P is negative
c. a normal good since the coefficient on M is positive
d. an inferior good since the coefficient on M is less than one (1).
Question 33
The figure below, which shows the linear demand and constant cost conditions facing a firm with a high barrier to entry.
If the entry barrier is removed consumers will be better off because…
Select one:
a. competition will eliminate the shortage caused by the entry barrier
b. productive efficiency will be restored
c. consumers will enjoy greater consumer surplus
d. none of the above
Question 34
The figure shows the demand and cost curves facing a monopoly in the short run.
The firm will sell its output at a price of…
Select one:
a. $2
b. $3
c. $3.75
d. $5
e. $6
Question 35
The following graph shows the marginal and average product curves for labor, the firm’s only variable input. The monthly wage for labor is $2,000. Fixed cost is $120,000.
What is the AVC at its minimum?
Select one:
a. $15
b. $25
c. $40
d. $80
e. $100
Question 36
The following payoff matrix shows the various profit outcomes for 3 projects, A, B, and C, under 2 possible states of nature: the product price is $15 or the product price is $25.
Using the maximax rule, the decision maker would choose…
Select one:
a. Project A
b. Project B
c. Project C
d. Impossible to say from the information given
Question 37
The graph on the left shows long-run average and marginal cost for a typical firm in a perfectly competitive industry. The graph on the right shows demand and long-run supply for an increasing-cost industry.
If this were instead a constant cost industry, what would be the price when the industry get to long-run competitive equilibrium?
Select one:
a. $4
b. below $4
c. between $7 and $4
d. $7
e. above $7
Question 38
The graph shows marginal benefits (MB) and marginal cost (MC) of activity A.
If the decision maker is choosing 100 units of activity A,
Select one:
a. the level maximizes net benefits
b. the activity could be increased by one unit and net benefits will increase by $20
c. the activity could be increased by one unit and the net benefits will decrease by $20
d. the activity could be increased by one unit and the net benefits will increase by $30
e. the activity could be increased by one unit and the net benefits will decrease by $30
Question 39
The graph shows the demand and marginal revenue in two markets, 1 and 2, for a price discriminating firm along with total marginal revenue, MRT, and marginal cost.
What total output should the firm produce?
Select one:
a. 200 units
b. 300 units
c. 400 units
d. 450 units
e. 850 units
Question 40
The market demand for a monopoly firm is estimated to be:
Qd = 80,000 – 400P + 3M + 2000PR
Where Q is output, P is price, M is income, and PR is the price of a related good. The manager has forecasted the values of M and PR will be $60,000 and $15, respectively, in 2011.
For 2011, the marginal revenue function is…
Select one:
a. MR = 80 – 0.002P
b. MR = 800 – 0.008Q
c. MR = 725 – 0.0025Q
d. MR = 725 – 0.005Q
Question 41
The price of capital (r) is $50.
What combination of labor (L) and capital (K) can produce 3,000 units of output as the lowest cost?
Select one:
a. 10K, 110L
b. 42K, 52L
c. 60K, 20L
d. 90K, 60L
e. 110K, 10L
Question 42
The price of X is $30 and the price of Y is $60.
How many units of Y will the consumer choose if point A is the utility-maximizing choice?
Select one:
a. 8
b. 12
c. 16
d. 24
e. None of the above
Question 43
The principal-agent problem arises when…
Select one:
a. The principal and the agent have different objectives
b. The principal cannot decide whether the firm should seek to maximize the expected future profits of the firm or maximize the price for which the firm can be sold
c. The principal cannot enforce the contract with the agent or finds it too costly to monitor the agent.
d. Both A and C.
e. None of the above
Question 44
These are the cost curves for a perfectly competitive firm.
If market price is $50, how much output will the firm produce?
Select one:
a. 0 Units
b. 100 Units
c. 300 Units
d. 400 Units
Question 45
To maximize profit a price discriminating firm should …
Select one:
a. allocate the output so that marginal revenue is the same in each market.
b. allocate the optimal output so the elasticity is the same in each market
c. produce the ouput at which total marginal revenue equals marginal cost
d. both A and C
e. both B and C
Question 46
Using the following marginal benefit and marginal cost functions for activity A:
MB = 100 – 0.05A
MC = 80 + 0.05A
The optimal level of A is…
Select one:
a. 1000
b. 2000
c. 600
d. 200
e. 100
Question 47
When there is negative externality in production,
Select one:
a. Marginal social benefit exceeds marginal private benefit
b. Marginal social cost exceeds marginal private cost
c. Marginal private cost exceeds marginal social cost
d. Marginal private benefit exceeds marginal social benefit
Question 48
Which of the following is a characteristic of a perfectly-competitive market?
Select one:
a. The firms are price-setters
b. All firms produce and sell a standardized or undifferentiated product
c. It is difficult for new firms to enter the market due to barriers to entry
d. The output sold by a particular firm may be quite different from the output sold by the other firms in the market
Question 49
Which of the following would decrease the supply of wheat?
Select one:
a. A decrease in the price of pesticides
b. An increase in the demand for wheat.
c. A rise in the price of wheat
d. An increase in the price of corn
e. None of the above
Question 50
Which of the following would lead to an INCREASE in the demand for golf balls?
Select one:
a. A decrease in the price of golf balls
b. An increase in the price of golf clubs
c. A decrease in the cost of producing golf balls
d. An increase in average household income when golf balls are a normal good
e. None of the above

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Economics-1 Proctored Final Examination

Part A, answer in one to three paragraphs

Assuming no government intervention, describe the market behavior that should result if the price of a product is below its equilibrium price; then describe the behavior that should occur if the price is above its equilibrium price.

2. How does inflation affect people’s standards of living and savings?

3. Define stock, bond, and mutual fund. What are the benefits and risks associatied with each of these investments?

Part B, answer in one to four sentences

1. Suppose the economy is experiencing inflation. What would be the interpretation of how a ristrictive monetary policy would address this problem?

2. Describe two types of specialization in production. What are the economic advantages of specialization?

3. What are political business cycles, and how could the be created?

4. Why are financial institutions required to keep reserves?

5. What is a price ceiling, and what are its economic effects?

6. Define the concept of offshoring, and explain the economic reasons why businesses use offshoring?

7. What is meant by economies of scale, and what is the importance of this concept to economic growth?

8. Define and explain eacy of the following: frictional unemployment, structural unemployment, and cyclical unemployment.

9. What is the multiplier effect, and how does it affect the GDP?

10. Define the term business cycle, and list the four phases of the business cycle.

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Economic value of college majors

Question-1: Summarize the evidence for the 10 worst college majors.

Question-2: Summarize the evidence for the 10 best college majors.

Question-3: Summarize the evidence for the majors with the highest unemployment Rates.

Question-4: Describe how you calculate the economic value of a college major.

Question-5: Describe the microeconomic problem of attending college. use data to make concrete all seven parts of a microeconomic problem.

Question-6: Describe the microeconomic problem of selecting a major. use data to make concrete all seven parts of a microeconomic problem.

Question-7: Analyze your major. Describe its job prospects? How much can you expect to earn? Will you be able to payback your school loans? Are there jobs in Ohio for your major? Also analyze your next best major. Include anything else you believe is important. In answering this question you are conducting cost/benefit analysis.

Question-8: Assume your selected major has a negative net present value of $300,000. Explain the logic of you sticking with it?

Question-9: Assume you return to your high school to speak with graduating seniors, what would you tell them about selecting a college major, use plain English, no micro talk. Make your presentation around 250 words.

Answer is 2400 words with 7 references and citations.

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Marginal Productivity Paper and discussion

Write 1,000-1,500 word paper in which you define what the concept of marginal productivity is, while applying it to several examples and applications.

Discussion Question
Describe the relationship between the number of inputs and the law of diminishing marginal productivity.
In more than 200 words.

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Economics Quiz

1. If the demand for loanable funds shifts left, then (Points : 1)

the real interest rate and the equilibrium quantity of loanable funds both fall.

the real interest rate falls and the equilibrium quantity of loanable funds rises.

the real interest rate and the equilibrium
quantity of loanable funds both rise.

the real interest rate rises and the equilibrium
quantity of loanable funds falls.

2. The theory of liquidity preference is most helpful in understanding (Points
: 1)
the wealth effect.

the exchange-rate effect.

the interest-rate effect.

misperceptions
theory.

3. If a country experiences capital flight, which of the following curves shift
right? (Points : 1)
only the demand for loanable funds.

only the supply of dollars in the market for foreign-currency exchange.

only the net capital outflow curve and the supply of dollars in the market for foreign currency exchange.

the demand for loanable funds, the net capital outflow curve, and the supply of dollars in the market for foreign currency
exchange.

4. If the U.S. imposed an import quota on apples, then which of the following would
rise? (Points : 1)
the U.S. real exchange rate and U.S. net
exports

the U.S. real exchange rate but not U.S. net
exports

U.S. net exports but not the U.S. real exchange
rate

neither the U.S. real exchange rate nor U.S. net
exports

5.
Figure 32-1

View Full Image

Refer to Figure 32-1. The loanable funds market is in equilibrium at
(Points : 1)
2 percent, $20 billion.

4 percent, $40 billion.

6 percent, $60 billion.

None of the above is
correct.

6. From
2001 to 2004, the U.S. government went from a budget surplus to a budget
deficit. According to the open-economy macroeconomic model, this should have
decreased (Points : 1)
both the supply of loanable funds and the supply
of dollars in the market for foreign-currency exchange.

neither the supply of loanable funds nor the
supply of dollars in the market for foreign-currency
exchange.

the supply of loanable funds but not the supply
of dollars in the market for foreign-currency exchange.

the supply of dollars in the market for
foreign-currency exchange, but not the supply of loanable
funds.

7. The
sticky-wage theory of the short-run aggregate supply curve says that when the
price level rises more than expected, (Points : 1)
production is more profitable and employment
rises.

production is more profitable and employment
falls.

production is less profitable and employment
rises.

production is less profitable and employment
falls.

8. Which of the following is a consistent response to an increase in the U.S. real
interest rate? (Points : 1)
a London bank purchases a U.S. bond instead of a Japanese bond it had considered purchasing.

U.S. firms decide to buy more capital goods

a U.S. citizen decides to put less money in his savings account than he had planned.

All of the above are consistent.

9.
According to liquidity preference theory, equilibrium in the money
market is achieved by adjustments in (Points : 1)
the price level.

the interest rate.

the exchange rate.

real
wealth.

10. If
there is capital flight from the United States, then the demand for loanable
funds (Points : 1)
and the supply of dollars in the
foreign-exchange market shift right.

and the supply of dollars in the
foreign-exchange market shift left.

shifts left while the supply of dollars in the
foreign-exchange market shifts right.

shifts right while the supply of dollars in the
foreign-exchange market shifts left.

11. If
at a given real interest rate desired national saving would be $50 billion,
domestic investment would be $40 billion, and net capital outflow would be $20
billion, then at that real interest rate in the loanable funds market there
would be a (Points : 1)
surplus. The real interest rate would
rise.

surplus. The real interest rate would
fall.

shortage. The real interest rate would
rise.

shortage. The interest rate would
fall.

12. In
recent years, the Federal Reserve has conducted policy by setting a target for
the (Points : 1)
size of the money
supply.

growth rate of the money
supply.

federal funds rate.

discount
rate.

13. If
the supply of loanable funds shifts right, then (Points : 1)

the real interest rate and the equilibrium
quantity of loanable funds both fall.

the real interest rate falls and the equilibrium
quantity of loanable funds rises.

the real interest rate and the equilibrium
quantity of loanable funds both rise.

the real interest rate rises and the equilibrium
quantity of loanable funds falls.

14.
Which of the following is included in the supply of U.S. dollars in the
market for foreign-currency exchange in the open-economy macroeconomic
model? (Points : 1)
A retail outlet in Canada wants to buy handbags
from a U.S. manufacturer.

A U.S. bank loans dollars to Karen, a U.S.
resident, who wants to purchase a car in the U.S.

A U.S. based law firm wants to build a new
office in Japan.

All of the above are
correct.

15. In the open-economy macroeconomic model, if there is a surplus in the market for
foreign-currency exchange, which of the following will move the market to
equilibrium? (Points : 1)
the real exchange rate depreciates and net exports fall.

the real exchange rate depreciates and net exports rise.

the real exchange rate appreciates and net
exports fall.

the real exchange rate appreciates and net
exports rise.

16.
Which of the following is included in the demand for dollars in the market for foreign-currency exchange in the open-economy macroeconomic
model? (Points : 1)
A firm in Mexico wants to buy corn from a U.S. firm.

A Japanese bank desires to purchase U.S. Treasury securities.

An U.S. citizen wants to buy a bond issued by a Mexican corporation.

All of the above are
correct.

17. If
a government increases its budget deficit, then domestic interest rates
(Points : 1)
and net exports rise.

rise and net exports
fall.

fall and net exports
rise.

and net exports
fall.

18.
Suppose that the United States imposes an import quota on televisions.
In the open-economy macroeconomic model this quota shifts the (Points :
1)
U.S. supply of loanable funds
left.

U.S. demand for loanable funds
left.

demand for U.S. dollars in the market for
foreign-currency exchange right.

supply of U.S. dollars in the market for
foreign-currency exchange left.

19. In the open-economy macroeconomic model, if a country’s interest rate rises, then
its (Points : 1)
net capital outflow and net exports rise.

net capital outflow rises and its net exports fall.

net capital outflow falls and its net exports rise.

net capital outflow and net exports fall.

20.
Which of the following contains a list only of things that decrease when the budget deficit of the U.S. increases? (Points : 1)

U.S. net exports, U.S. domestic investment, U.S. net capital outflow

U.S. supply of loanable funds, U.S. interest
rates, U.S. domestic investment

U.S. imports, U.S. interest rates, the real
exchange rate of the dollar

None of the above is correct.

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Economics- 2 questions

******* Question-1 *******
Suppose that the U.S. Department of Agriculture (USDA) administers the price floor for cheese, set at $0.17 per pound of cheese. (In real life, the actual price floor was officially set at $16.10 per hundredweight of cheese. One hundredweight is 100 pounds.) At that price, according to data from the USDA, the quantity of cheese produced in 2009 by U.S. producers was 212.5 billion pounds, and the quantity demanded was 211 billion pounds. To support the price of cheese at the price floor, the USDA had to buy up 1.5 billion pounds of cheese. The accompanying diagram shows supply and demand curves illustrating the market for cheese.

a. In the absence of a price floor, the maximum price that a few of the consumers are willing to pay is $0.20 for a pound of cheese whereas the market equilibrium price is $0.13 per pound. The graph also shows that the minimum price at which a few of the producers are willing to sell is $0.06 per pound. In the absence of a price floor, how much consumer surplus is created?

b. How much producer surplus?

c. What is the total surplus

d. The maximum price that a few of the consumers are willing to pay is $0.20 per pound of cheese, and the price floor is set at $0.17 per pound. With the price floor at $0.17 per pound of cheese, consumers buy 211 billion pounds of cheese. How much consumer surplus is created now?

e. The minimum price at which a few of the producers are willing to sell a pound of cheese is $0.06, and the price floor is set at $0.17 per pound. With the price floor at $0.17 per pound of cheese, producers sell 212.5 billion pounds of cheese (some to consumers and some to the USDA). How much producer surplus is created now?

f. The surplus cheese USDA buys is the difference between the quantity of cheese producers sell (212.5 billions of pounds of cheese) and the quantity of cheese consumers are willing to buy at the price floor (211 billions of pounds of cheese). How much money does the USDA spend on buying up surplus cheese?

g. Taxes must be collected to pay for the purchases of surplus cheese by the USDA. As a result, total surplus (producer plus consumer) is reduced by the amount the USDA spent on buying surplus cheese. Using your answers for parts b—d, what is the total surplus when there is a price floor?

h. How does this compare to the total surplus without a price floor from part a?

******* Question-2 *******
The accompanying table shows the price and yearly quantity sold of ice cream cones on Sidfield Island.

Price of Ice Cream Cones Quantity of Ice Cream Cones Demanded
$1 3000
$2 2400
$3 1600
$4 800

a. Using the midpoint method (show your work), calculate the price elasticity of demand when the price of an ice cream cone rises from $1 to $2.

b. What does this estimate imply about the price elasticity of demand for ice cream cones?

c. Using the midpoint method (show your work), calculate the price elasticity of demand when the price of an ice cream cone rises from $3 to $4.

d. What does this estimate imply about the price elasticity of demand for ice cream cones?

e. Notice that the estimates from (a) and (b) above are different. Why do price elasticity of demand estimates change along the demand curve?

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Economics 3 Parts with References and Citations (latst data)

Part I

Describe John Maynard Keynes’ contribution to the theories of Macroeconomics. Why was he such an important economist? Discuss the theories of two other 20th century economists who made a significant contribution to the study of economics.

Part II

Assume that Country A has a population of 500,000 and only produces one good—cars. Country A produces 100,000 cars per year. The people in Country A purchase 90,000 cars, but there are not enough cars to fulfill all the demand. They decide to import 50,000 more. The government buys 25,000 cars for its police force, and 10,000 cars are bought by companies to transport employees to other locations to work. They also export 65,000 cars to nearby countries for sale.

What is Country A’s GDP?
What is the composition of GDP by percentage?
What is the GDP per capita?
How does this relate to Keynesian economics?

Part III

Go to the Bureau of Economic Analysis on the Department of Commerce’s Web site, and look up the latest new release for real GDP. Address the following questions after reading the latest release:

Where are we in the business cycle?
What is the real GDP today?
What is the largest component of GDP?
What is the smallest component of GDP?
What is the fastest growing component of GDP and why?
What components of GDP were involved in the change from last month to this month?
What is the price index today?
What caused the change?

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Crossroads Sign Case

Crossroads Sign Case

Assume you are the plant manager for Crossroads Sign Company, which produces road signs in a market that approximates perfect competition. Due to a slow economy, business has been slow and the company is losing money every month. The owners have asked you whether to continue operations or to shut down at least until the economy improves. You have the following information available:
Marginal Revenue (MR) = $130 Total Cost (TC) = $1,100 + 135Q + 0.6Q²Marginal Cost (MC) = 135 + 1.2Q
As the plant manager, should you recommend to the owners that the plant be shut down for a while? Justify your answer using at least two analytical techniques and presenting the information graphically.
There are two shutdown conditions for the firm 1) P TFC. From the equations, you need to generate a table of costs and revenues assuming different values for Q. Create your report in a 2- to 3-page Microsoft Word document

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