Reference no: EM133195630
Assignment:
1. Scarcity and Opportunity Cost.
(a) What is scarcity and how does it relate to opportunity cost?
(b) Determine whether each of the following is a positive or normative statement?
i. "Economic 101 is the most important class you are taking right now"
ii. "Midterm performance is not highly correlated with final exam performance"
iii. "Pulling ‘all-nighters" negatively affects exam performance"
iv. "Sitting near the front of the class is better than sitting in the back"
v. "You are smart to have chosen my section of economics 101"
(c) What is the difference between microeconomics and macroeconomics?
(d) What are the phases of the scientific method?
(e) What is the ceteris paribus assumption? What are the consequences if it is violated?
2. Production. The table below shows the production possibilities for Loki and Thanos.
LOKI
|
Infinity Stones to Steal
|
Planets to Destroy
|
|
0
|
6
|
|
1
|
3
|
|
2
|
0
|
THANOS
|
Infinity Stones to Steal
|
Planets to Destroy
|
|
0
|
8
|
|
3
|
4
|
|
6
|
0
|
(a) What is Thanos's OC for each of the following (use the correct unit):
i. Destroying Planets
ii. Stealing Infinity Stones
(b)What is Loki's OC for each for the following (use the correct unit):
i. Destroying Planets
ii. Stealing Infinity Stones
(c) Who has comparative advantage for stealing Infinity Stones? Destroying Planets?
(d) Who has absolute advantage for stealing Infinity Stones? Destroying Planets?
(e) Plot Thanos and Loki's COMBINED Production Possibilities Frontier in the space below. Be sure to label your axes.
(f) Looking at the Combined PPF, if Loki and Thanos decided to work together, how many Infinity Stones could they steal if they destroyed 6 planets?
3. Supply and Demand. The market for escalators faces the following supply and demand schedules.
|
Price (thousands)
|
Quantity Demanded
|
Quantity Supplied
|
|
$5
|
200
|
40
|
|
$6
|
160
|
80
|
|
$7
|
120
|
120
|
|
$8
|
80
|
160
|
a. What is the equilibrium price and quantity? (Hint: double check your units.)
b. Draw the supply and demand curves on the plot below and label them S and D, respectively. Label the equilibrium price and quantity.
c. The federal government decides to institute a tax on companies that produce escalators due to concerns that they are causing injuries, how would this affect the Supply for escalators? Show the effect of this tax graphically, labelling the new Supply curve as S2. What would happen the equilibrium price?
d. f the prices of stairs were to rise, how would you expect this to affect demand for escalators?
Measuring the Economy.
(a) What are the components of GDP? Explain what each is.
(b) Use the components of GDP to construct the circular flow model.
(c) For each of the following goods/service, tell whether you think it would directly be included an American GDP calculation.
i. An X-Box purchased on Craigslist: ______________
ii. A novel from Barnes & Noble: ____________
iii. Business management consulting: _____________
iv. Someone from the U.S. teaching ski lessons in Japan: ____________
v. Spinach purchased at the local farmer's market: _____________
(d) Explain the difference between GDP and GDI.
5. Inflation, and Unemployment. The State of Oklahoma decided to create the Oklahoma Price Index (OPI) to evaluate the productivity of the Oklahoman economy over the course of time.
|
Good/Service
|
Quantity
|
1965 Price
|
1990 Price
|
2015 Price
|
|
OU football tickets
|
2
|
$8
|
$25
|
$75
|
|
McDonald's #1 combo
|
4
|
$1.50
|
$4
|
$8
|
|
Lawnmower
|
1
|
$60
|
$100
|
$175
|
|
Large cotton sweater
|
1
|
$8
|
$12
|
$20
|
|
Gallon of gasoline
|
10
|
$0.22
|
$1.01
|
$2.05
|
|
Lb. of chicken
|
5
|
$0.45
|
$1.13
|
$3.07
|
(a) What was the rate of inflation in the state of Oklahoma from 1965 to 1990?
(b) Taking 1965 as the base year, what was the value of the OPI in 2015?
(c) Which year did a lawnmower have the highest real value? Which year did it have the lowest real value?
(d) Oklahoma has a population of 950,000 and there are 10,000 unemployed people there. If the state has an unemployment rate of 2.5%, then what is the labor force of Oklahoma?
(e) Match each of the following scenarios with the different kinds of unemployment, structural unemployment, frictional unemployment, or cyclical unemployment.
i. There are a lot of oil companies in Oklahoma that need legal services, but not very many graduates from law schools in the state every year.
ii. Most firms in Oklahoma require three weeks to do background checks before formally hiring anyone.
iii. Despite being one of the states that felt a "lighter" impact of the 2009 Recession, unemployment rates still rose to around 7%.