BMicro+HA1++Problem+Set - Business Microeconomics Problem...

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Business Microeconomics Problem set 1: What is Economics; The Economic Problem; Demand and Supply 1 HOME ASSINGMENT # 1 Textbook chapters: MP: Ch.1, Ch.1 App.; Ch.2; and Ch.3; CFO: Ch.1, Ch.2, Ch.3 and Ch.4 CHAPTER 1: WHAT IS ECONOMICS? 1. Apple Computer Inc. decides to make iTunes freely available in unlimited quantities. a. How does Apple’s decision change the opportunity cost of a download? b. Does Apple’s decision change the incentives that people face? c. Is Apple’s decision an example of a microeconomic or a macroeconomic issue? 2. Which of the following pairs does not match: a. Labor and wages? b. Land and rent? c. Entrepreneurship and profit? d. Capital and profit? 3. Which of the following statements is positive, which is normative, and which can be tested? a. The U.S. government should cut its imports. b. China is the United States’ largest trading partner. c. If the price of antiretroviral drugs increases, HIV/AIDS sufferers will decrease their consumption of the drugs. 4. Before starring as Tony Stark in Iron Man , Robert Downey Jr. had played in 45 movies that had average first-weekend box office revenues of a bit less than $5 million. Iron Man grossed $102 million on its opening weekend. a. How do you expect the success of Iron Man to influence the opportunity cost of hiring Robert Downey Jr.? b. How have the incentives for a movie producer to hire Robert Downey Jr. changed? 5. How does the creation of a successful movie influence what, how, and for whom goods and services are produced? 6. How does the creation of a successful movie illustrate self-interested choices that are also in the social interest? 7. You plan a major adventure trip for the summer. You won’t be able to take your usual summer job that pays $6,000, and you won’t be able to live at home for free. The cost of your travel on the trip will be $3,000, film and videotape will cost you $200, and your food will cost $1,400. What is the opportunity cost of taking this trip? 8. The university has built a new parking garage. There is always an available parking spot, but it costs $1 per day. Before the new garage was built, it usually took 15 minutes of cruising to find a parking space. Compare the opportunity cost of parking in the new garage with that in the old parking lot. Which is less costly and by how much? 9. The spreadsheet in the right provides data on the U.S. economy: Column A is A B C D E 1 1997 2.8 7.6 2.5 5.6 2 1998 2.9 7.4 3.7 5.4 3 1999 2.3 7.3 4.5 4.9 4 2000 1.6 6.5 4.2 4.5 5 2001 2.2 7.0 4.4 4.2 6 2002 3.4 7.6 3.7 4.0 7 2003 2.8 7.1 0.8 4.7 8 2004 1.6 6.5 3.6 5.8 9 2005 2.3 5.7 3.1 6.0 10 2006 2.5 5.6 2.9 4.6 11 2007 4.1 5.6 2.2 4.6
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Business Microeconomics Problem set 1: What is Economics; The Economic Problem; Demand and Supply 2 the year, column B is the inflation rate, column C is the interest rate, column D is the growth rate, and column E is the unemployment rate. Use this spreadsheet to answer on next questions.
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