Econ 102 HW 3 - Homework 3 Submitted by DUNLEAVY...

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Unformatted text preview: 5/7/2015 Homework 3 Submitted by DUNLEAVY, COLLIN (CPD5141) on 2/6/2015 4:24:08 PM Points Awarded Points Missed Percentage 13.50 2.50 84.4% 1. Which of the following is an example of an application of the ceteris paribus assumption? A) An analysis of how price changes affect how much of a good people will purchase when all other factors are held constant B) An analysis of how people purchase more goods when prices decline and income increases C) After reading an article on the dangers of high-­fat diets, an individual buys less red meat when prices increase D) An analysis of how worker productivity increases when a firm invests in new machines and training programs Points Earned: 0.5/0.5 Correct Answer(s): A 2. Video Question. Watch the following video: According to the video, what is true about the phrase “Rich people should pay more taxes?” A) The statement is positive since most people agree with it B) The statement is positive since rich people don’t pay enough taxes C) The statement is normative because some people disagree with it D) The statement is normative because it is an opinion statement that can’t be tested Points Earned: 0.5/0.5 Correct Answer(s): D 3. Opportunity cost is illustrated on the production possibilities curve by a A) bowed-­out shape of the curve. B) shift to the right of the curve. C) shift to the left of the curve. D) movement along the curve. Points Earned: 0.5/0.5 Correct Answer(s): D 4. … 1/11 5/7/2015 Homework 3 A farmer has 100 acres of land on which he can grow soybeans or corn. An acre of land yields 200 bushels of soybeans or 100 bushels of corn. How many bushels of corn are produced at point “a”? A) 10,000 B) 2,500 C) 1,000 D) 0 Points Earned: 0.5/0.5 Correct Answer(s): B 5. In the above figure, what is the opportunity cost of one bushel of corn? A) 1 bushel of soybeans B) 0.5 bushel of soybeans C) 2 bushels of soybeans D) unable to determine Points Earned: 0.0/0.5 Correct Answer(s): C 6. Questions 6 -­ 14 involve a bit of math, and you may even want to draw some tables. Arnold and Helga are neighbors each doing work foraging for food. Arnold takes 1 minute to get a banana and 8 minutes to get a coconut. Helga takes 2 minutes to get a banana and 12 minutes to get a coconut. Which is true? A) Helga has the absolute advantage in both banana and coconut production B) Helga has the absolute advantage in banana production, and Arnold has the absolute advantage in coconut production C) Arnold has the absolute advantage in both banana and coconut production D) Arnold has the absolute advantage in banana production, and Helga has the absolute advantage … 2/11 5/7/2015 Homework 3 in coconut production Points Earned: 0.5/0.5 Correct Answer(s): C 7. What is the opportunity cost of Helga gathering a coconut? A) 2 bananas B) 0.1666 bananas C) 0.666 bananas D) 8 bananas E) 0.125 bananas F) 0.5 bananas G) 1.5 bananas H) 6 bananas Points Earned: 0.5/0.5 Correct Answer(s): H 8. What is the opportunity cost of Arnold gathering a banana? A) 2 coconuts B) 0.1666 coconuts C) 0.666 coconuts D) 8 coconuts E) 0.125 coconuts F) 0.5 coconuts G) 1.5 coconuts H) 6 coconuts Points Earned: 0.5/0.5 Correct Answer(s): E 9. Which is true with regards to comparative advantage? A) Arnold has the comparative advantage in both banana and coconut production B) Arnold has the comparative advantage in banana production, and Helga has the comparative advantage in coconut production C) Helga has the comparative advantage in both banana and coconut production D) Helga has the comparative advantage in banana production, and Arnold has the comparative advantage in coconut production Points Earned: 0.5/0.5 Correct Answer(s): B 10. Suppose Arnold and Helga each specialize in their comparative advantage. Also assume a 4-­hour (240 minute) workday at the farm. What is the total output produced? A) Arnold produces 30 coconuts and Helga produces 20 coconuts … 3/11 5/7/2015 Homework 3 B) Arnold produces 30 coconuts and Helga produces 120 bananas C) Arnold produces 240 bananas and Helga produces 120 bananas D) Arnold produces 240 bananas and Helga produces 20 coconuts E) Arnold produces 120 bananas and 15 coconuts and Helga produces 60 bananas and 10 coconuts Points Earned: 0.5/0.5 Correct Answer(s): D 11. Based on the time it takes for banana and coconut production, Arnold and Helga determine the terms of trade for bananas and coconuts. They decide that 1 coconut is worth 7 bananas. Helga gives Arnold 10 coconuts, and Arnold gives Helga 70 bananas. Which is true after the trade? A) Arnold now has 24 coconuts and 310 bananas B) Arnold now has 40 coconuts and 50 bananas C) Arnold now has 10 coconuts and 0 bananas D) Arnold now has 10 coconuts and 170 bananas Points Earned: 0.5/0.5 Correct Answer(s): D 12. Based on the trade mentioned in the previous question, which is true after the trade? A) Helga now has 10 coconuts and 70 bananas B) Helga now has 30 coconuts and 50 bananas C) Helga now has 50 coconuts and 140 bananas D) Helga now has 0 coconuts and 70 bananas Points Earned: 0.5/0.5 Correct Answer(s): A 13. Consider Arnold’s total amount of bananas and coconuts after the trade in question 11. What can we say about Arnold’s ability to have produced this level of output without trade and specialization? Hint: See how many minutes it would have taken Arnold to produce the level of goods he now has. A) Arnold could have produced this output with time to spare. B) Arnold could have produced this level of output efficiently. C) Arnold could not have produced this level of output on his own. Points Earned: 0.5/0.5 Correct Answer(s): C 14. Consider Helga’s total amount of bananas and coconuts after the trade in question 12. What can we say about Helga’s ability to have produced this level of output without trade and specialization? Hint: See how many minutes it would have taken Helga to produce the level of goods she now has. A) Helga could have produced this output with time to spare. B) Helga could have produced this level of output efficiently. … 4/11 5/7/2015 Homework 3 C) Helga could not have produced this level of output on her own. Points Earned: 0.5/0.5 Correct Answer(s): C 15. See the picture above. What concept is illustrated? A) An increase in demand B) A decrease in demand C) An increase in quantity demanded D) A decrease in quantity demanded E) More than one of the above answers could be correct – it depends on the preferences of the man in the picture, “The Most Interesting Man in the World”. Points Earned: 0.0/0.5 Correct Answer(s): C 16. Which factor would cause a movement down and right along the demand curve for pizza? A) an increase in the number of students in town B) a renewed preference for Italian food C) a drop in the price of pizza D) an increase in average income E) all of the above Points Earned: 0.0/0.5 Correct Answer(s): C … 5/11 5/7/2015 Homework 3 17. Refer to the above table. What is the market quantity demanded of DVDs at a price of $12? A) 6 B) 9 C) 12 D) 24 Points Earned: 0.5/0.5 Correct Answer(s): D 18. Using the above table, at a price of $5 there will be a A) shortage of 20 units. B) shortage of 10 units. C) surplus of 20 units. D) surplus of 10 units. Points Earned: 0.5/0.5 Correct Answer(s): C 19. Which of the following statements is FALSE? A) An increase in income causes an increase in the demand for a normal good. B) An increase in income causes a decrease in the demand for an inferior good. C) A decrease in income causes the demand curve for a normal good to shift to the left. D) An increase in income causes the demand curve for an inferior good to shift to the right. Points Earned: 0.5/0.5 … 6/11 5/7/2015 Homework 3 Correct Answer(s): D 20. Suppose that goods X and Y are substitutes and the price of good Y falls. We would then expect A) the quantity of good Y demanded to increase and the demand for good X to increase. B) an increase in the demand for good X and a decrease in the quantity of good Y demanded. C) an increase in the quantity demanded of good Y and a decrease in the demand for good X. D) an increase in the demand for both good X and good Y. Points Earned: 0.5/0.5 Correct Answer(s): C 21. Other things being equal, an increase in wages paid to workers in the steel industry will cause A) the quantity of steel demanded to increase. B) the quantity of steel supplied to decrease. C) the supply of steel to decrease. D) the demand for steel to decrease. Points Earned: 0.5/0.5 Correct Answer(s): C 22. Consider the standard demand-­supply framework. Which of the following would cause an increase in the equilibrium price? A) Increase in demand B) Decrease in demand C) Increase in supply D) Decrease in supply E) [A] and [D] are correct F) [B] and [C] are correct Points Earned: 0.5/0.5 Correct Answer(s): E 23. Each of the following would cause an increase in the supply of baseballs EXCEPT A) an improvement in technology. B) a decrease in the cost of labor used to produce baseballs. C) an expectation that the price of baseballs will rise in the future. D) an increase in the number of baseball producers. Points Earned: 0.5/0.5 Correct Answer(s): C 24. What happens as the result of a shortage? A) There is downward pressure on prices. … 7/11 5/7/2015 Homework 3 B) There is upward pressure on prices. C) Consumers begin to view the good as an inferior good because they have a hard time finding it. D) Supply of the good decreases. Points Earned: 0.5/0.5 Correct Answer(s): B 25. According to the above figure, at a price of $1 per gallon, there would be A) a shortage of 30 million gallons B) a surplus of 30 million gallons C) a shortage of 20 million gallons D) a surplus of 50 million gallons E) a shortage of 10 million gallons Points Earned: 0.0/0.5 Correct Answer(s): C 26. Suppose that, at a rental rate of $1000 per month, 650 residents wish to rent apartments and that landlords offer 800 apartments available for rent. Which one of the following statements is then true? A) There is a shortage of 150 apartments. B) There is an excess demand for apartments. C) $1000 is the market clearing price for apartments D) The market clearing rental price of apartments is less than $1000 per month. E) The market clearing rental price of apartments is more than $1000 per month. Points Earned: 0.0/0.5 Correct Answer(s): D … 8/11 5/7/2015 Homework 3 27. Look at the above picture. In 2014, Penn State football introduced variable pricing for football game tickets, where there are different ticket prices for different games (see the first paragraph on this page -­footbl-­tickets-­variable-­pricing-­faq.html). In 2014, why did the Ohio State game have higher ticket prices? A) There is a lower supply of Ohio State tickets B) There is a higher demand for Ohio State tickets C) There is an increase in quantity supplied for Ohio State tickets … 9/11 5/7/2015 Homework 3 D) There is a decrease in quantity demanded for Ohio State tickets E) There is an increase in quantity demanded for Ohio State tickets Points Earned: 0.5/0.5 Correct Answer(s): B 28. Watch the following video: This is the same analysis we did in class discussing a simultaneous shift in demand and supply. In class and in the video, we drew an increase in demand and an increase in supply. What will happen if you draw a simultaneous increase in demand and decrease in supply? A) the equilibrium price definitely rises, and the equilibrium quantity falls. B) the equilibrium price definitely rises, and the equilibrium quantity is ambiguous. C) the equilibrium price definitely falls, and the effect on the equilibrium quantity is ambiguous. D) the effect on the market clearing price is ambiguous, and the equilibrium quantity definitely falls. Points Earned: 0.5/0.5 Correct Answer(s): B 29. What situation gives rise to a surplus? A) There is a small equilibrium quantity B) The current price of the good is below its market clearing price C) The current price of the good is above its market clearing price D) Supply of the good decreases, but the market price is not permitted to change E) Both [C] and [D] are correct Points Earned: 0.5/0.5 Correct Answer(s): C 30. Solve for equilibrium: Qd = 136 – 2P Qs = 1 + 3P A) P* = 12, Q* = 37 B) P* = 135, Q* = 2 C) P* = 5, Q* = 16 D) P* = 27, Q* = 82 Points Earned: 0.5/0.5 Correct Answer(s): D … 10/11 5/7/2015 Homework 3 31. For the next two questions, you will need to read the article on page 255 of your notes packet "Norwegians bidding for black market butter". According to the article, what caused the severe butter shortage? A) a recent increase in demand for butter B) a decrease in the supply of butter due to weather C) restrictive import policies in Norway D) All of the above Points Earned: 0.5/0.5 Correct Answer(s): D 32. According to the article, how are the forces of supply and demand allocating butter in times of shortage? A) the government is rationing butter B) consumers are bidding up the price and the product is sold to the highest bidder C) suppliers are hoarding butter to drive the price up even further D) All of the above Points Earned: 0.5/0.5 Correct Answer(s): B Continue … 11/11 ...
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  • Spring '11
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  • Economics, HELGA, correct  answer

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