Reference no: EM1399868

1. Using the following Fixed Basket of goods (Basket = 6 pizzas, 12 Tacos):

	Pplzza	Ptacos
2010	$6.50	$2.80
2011	$7.90	$3.35
2012	$9.60	$3.90
2013	$11.00	$4.10

a) Calculate the Consumer Price Index (CPI) in each year.

b) Calculate the inflation rate from 2010 to 2011 and then from 2010 to 2013 using the calculated CPIs.

2. Using the economy below that produces only pizza and tacos:

	Pplzza	QpIzza	Ptacos	Qtacos	Pwings	QwIngs
2010	$12.90	330	$12.50	590	$0.35	2000
2011	$13.80	475	$13.25	665	$0.55	2400
2012	$14.95	520	$14.75	765	$0.70	2590
2013	$15.20	600	$15.25	980	$1.05	2650

c) Calculate nominal GDP, real GDP (using 2010 as the base year), and the GDP deflator.

d) Calculate the inflation rate from 2010 to 2011 and then from 2010 to 2013.

3. Using the following Fixed Basket of goods (Basket = 7 pizzas, 15 Tacos, 50 wings):

Ppizza                                         Ptacos                                      Pwings

2010	$8.50	$1.20	$0.65
2011	$9.90	$2.00	$0.95
2012	$10.60	$3.50	$1.25
2013	$11.40	$3.90	$1.40

c) Calculate the Consumer Price Index (CPI) in each year.

d) Calculate the inflation rate from 2010 to 2011 and then from 2010 to 2013 using the calculated CPIs.

4.  Name four supply and four demand shifters (for a total of 8 shifters) and explain in detail how a change in each will affect both price and quantity.

5. What are the three basic economic questions every economic system must answer regardless of its economic organization? Explain how each question is answered within the "circular flow diagram" of an economy?

6. Explain fully the difference between a pure public good, quasi-public good, private good and a common resource. Make sure you include the rival vs. non-rival and excludable vs. non-excludable characteristics of the goods.

7. Calculate the price elasticity of demand from a price increase from Pi to P2 for the following values:

P₂ = $19.00

P₁ = $16.00

Q₁ = 1890

Q₂ = 1470

8. Calculate the price elasticity of demand from a price decrease from P2t0 H for the following values:

P₁= $55

P₂ = $95

Q₂ = 1280

Q₁ = 1790

9. Calculate the income elasticity of demand for a good for an increase in income from l₁ = $22,000 to l₂ = $39,000 using the following Q values:

l₁ = $22,000

l₂ = $39,000

Q₁ = 1150

Q₂⁼ 1162

10. Calculate the income elasticity of demand for a good for an increase in income from 11 = $22,000 to 12 = $39,000 using the following Q values:

1₁ = $22,000

1₂ = $39,000

Q₁= 2100

Q₂ = 2200

11. Calculate the income elasticity of demand for a good for an increase in income from 11 = $22,000 to 12 = $39,000 using the following Q values:

1₁ = $22,000

1₂ = $39,000

Q₁ = 895

Q₂ = 3350

12. Calculate the income elasticity of demand for a good for an increase in income from l₁ = $22,000 to l₂ = $39,000 using the following Q values:

l₁ = $22,000

l₂ = $39,000

Q₁ = 110

Q₂ = 125

13. Calculate the price elasticity of supply from a price increase from P₁ to P₂ for the following values:

P₂ = $18.00

P₁ = $16.80 Q₁ = 1150

Q₂ = 1780

14. Calculate the price elasticity of supply from a price decrease from P₁ to P₂ for the following values:

P₂ = $1440

P₁ = $1970

Q₁ = 97800

Q₂ = 12789

Use the following two Price Floor and Price Ceiling figures to answer question 15 and 16:

15. Using the Price Floor figure above calculate the before and after consumer surplus, producer surplus, and deadweight loss from the Price Floor.

16. Using the Price Ceiling figure above calculate the before and after consumer surplus, producer surplus, deadweight loss from the Price Ceiling.