EC120 SI Session 3 - If you have any questions about the...

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Unformatted text preview: If you have any questions about the course material learned in EC120, please write it up on the board! Welcome to EC120 SI Welcome Run by the Study Skills and Run Supplemental Instruction Centre Supplemental Today’s Agenda Today’s 0-10 minutes Lecture Review 10-55 minutes Pop Quiz 55-85 minutes Application of Elasticity Price Price elasticity, income elasticity, cross-price elasticity elasticity 85-105 minutes Elasticity exercises 105-120 minutes Take-up exercises 120-150 minutes Take-up last week’s 120-150 handout handout Tuesday’s Review Workshop Tuesday’s Science Building N1002 9-11:30pm Bring clickers! 5 minutes – Study tips 10 minutes – Create outline 80 minutes – Midterm Review 5 minute break 30 minutes – mock midterm 20 minutes – mock midterm take-up Review Review 12 12 If If multiple choice questions multiple you get 9/12 or higher, you’re in good shape shape you get less than 9/12, come to Tuesday’s review workshop Tuesday’s If If 1. Andrea has a full-time job as an accountant that pays her $70,000 per year. She is considering quitting her job to start her own accounting business. Office supplies, software, and other out-of-pocket operating expenses will be $18,000 per year. She finances her start-up costs (i.e. buying a computer, laptop, and some furniture) by getting a loan. The interest on the loan will be $3,000 per year. The annual opportunity cost of Andrea’s restaurant business is of a) b) c) d) e) $18,000 $21,000 $70,000 $88,000 $91,000 Andrea Andrea has a full-time job as an accountant that pays her $70,000 per year. She is considering quitting her job to start her own accounting business. Office supplies, software, and other out-of-pocket operating expenses will be $18,000 per year. She finances her start-up costs (i.e. buying a computer, laptop, and some furniture) by getting a loan. The interest on the loan will be $3,000 per year. The annual opportunity cost of Andrea’s restaurant business is of a) b) c) d) e) $18,000 $21,000 $70,000 $88,000 $91,000 2. An economy has 90 workers that can either produce buildings or cars. The table below indicates the daily outputs of buildings and cars that can be produced with various quantities of labour. As building production is increased the opportunity cost of producing buildings Number Daily building output of workers 0 0 30 0.1 60 0.2 90 0.3 Number of workers 90 60 30 0 Daily car production 6 5 3 0 a) stays constant b) falls c) rises d) falls and then rises 2. An economy has 90 workers that can either produce buildings or cars. The table below indicates the daily outputs of buildings and cars that can be produced with various quantities of labour. As building production is increased the opportunity cost of producing buildings Number Daily building output of workers 0 0 30 0.1 60 0.2 90 0.3 Number of workers 90 60 30 0 Daily car production 6 5 3 0 a) stays constant b) falls c) rises d) falls and then rises 3. If DVD players and DVD discs are complements in consumption, then a decrease in the price of DVD players will cause the equilibrium price of DVD discs to___ and the equilibrium quantity of DVD discs to __. discs a) b) c) d) rise; rise; fall; fall; fall; fall; rise; rise; fall fall rise rise fall fall rise rise If DVD players and DVD discs are complements in consumption, then a decrease in the price of DVD players will cause the equilibrium price of DVD discs to___ and the equilibrium quantity of DVD discs to __. discs a) a) b) c) d) rise; rise; fall; fall; fall; fall; rise; rise; fall fall rise rise fall fall rise rise 4. In which of the following statements is the term “demand” used correctly term I. An increase in the price of beer will I. decrease the demand for beer decrease II. A decrease in the price of Heineken will II. decrease the demand for Coors. decrease a) Both statements b) Neither statement c) I only d) II only 4. In which of the following statements is the term “demand” used correctly term I. An increase in the price of beer will I. decrease the demand for beer decrease II. A decrease in the price of Heineken will II. decrease the demand for Coors. decrease a) Both statements b) Neither statement c) I only d) II only Output per worker Wood Canada China 12 tonnes 1 tonnes Computers 3 units 10 units 5. The opportunity cost of 1 tonne of wood in Canada is a)3 computer units b)1/4 computer unit c)10 computer units d)1/3 computer unit e)6 computer units Output per worker Wood Canada China 12 tonnes 1 tonnes Computers 3 units 10 units 5. The opportunity cost of 1 tonne of wood in Canada is a)3 computer units a)1/4 computer unit a)10 computer units b)1/3 computer unit c)6 computer units Output per worker Wood Canada China 12 tonnes 1 tonnes Computers 3 units 10 units 6. Which of the following is true (pick the best answer) a) Canada has a comparative advantage in wood; China has a comparative advantage in computers a) China has a comparative advantage in wood; Canada has a comparative advantage in computers a) Canada has no comparative advantage; the US has an absolute advantage in computers a) Neither country has an absolute advantage in wood a) Both a) and d) are correct. Output per worker Wood Canada China 12 tonnes 1 tonnes Computers 3 units 10 units 6. Which of the following is true (pick the best answer) a) Canada has a comparative advantage in wood; China has a comparative advantage in computers a) China has a comparative advantage in wood; Canada has a comparative advantage in computers a) Canada has no comparative advantage; the US has an absolute advantage in computers a) Neither country has an absolute advantage in wood a) Both a) and d) are correct. Output per worker Wood Computers Canada 12 tonnes 3 units China 1 tonnes 10 units 7. Canada will gain from trade if it exports (pick the best answer) a) wood at any price greater than 1/4 computer units per tonne of wood a) wood at any price less than 1/10 computer units per tonne of wood a) wood at any price less than 10 computer units per tonne of wood a) computers at any price less than 4 tonnes of wood per computer unit a) computers at any price greater than 1/4 tonnes of wood per computer unit Output per worker Wood Computers Canada 12 tonnes 3 units China 1 tonnes 10 units 7. Canada will gain from trade if it exports (pick the best answer) a) wood at any price greater than 1/4 computer units per tonne of wood a) wood at any price less than 1/10 computer units per tonne of wood a) wood at any price less than 10 computer units per tonne of wood a) computers at any price less than 4 tonnes of wood per computer unit a) computers at any price greater than 1/4 tonnes of wood per computer unit Output per worker Wood Canada China 12 tonnes 1 tonnes Computers 3 units 10 units 8. If there are 5 million workers in Canada and if Canada trades with China at a relative price of 0.50 units of computer per tonne of wood then the intercepts of Canada’s consumption possibilities boundary are a) b) c) d) e) 60 million tonnes of wood; 40 million tonnes of wood; 60 million tonnes of wood; 22.5 million tonnes of wood; 60 million tonnes of wood; 45 million computer units 30 million computer units 80 million computer units 30 million computer units 30 million computer units Output per worker Wood Canada China 12 tonnes 1 tonnes Computers 3 units 10 units 8. If there are 5 million workers in Canada and if Canada trades with China at a relative price of 0.50 units of computer per tonne of wood then the intercepts of Canada’s consumption possibilities boundary are a) b) c) d) a) 60 million tonnes of wood; 40 million tonnes of wood; 60 million tonnes of wood; 22.5 million tonnes of wood; 60 million tonnes of wood; 45 million computer units 30 million computer units 80 million computer units 30 million computer units 30 million computer units 9. If the income elasticity of demand for income wheat is 0.5 then wheat would be considered __ and an increase in income income will cause ___ the demand curve for wheat. wheat. a) a) b) c) c) d) e) a price inelastic good; an inferior good; an inferior good; a necessity a necessity a movement along a rightward shift of rightward a leftward shift of a rightward shift of a leftward shift of If If the income elasticity of demand for income wheat is 0.5 then wheat would be considered __ and an increase in income income will cause ___ the demand curve for wheat. wheat. a) a) b) c) c) d) e) a price inelastic good; an inferior good; an inferior good; a necessity a necessity a movement along a rightward shift of rightward a leftward shift of a rightward shift of a leftward shift of 10. If the demand curve for bottled water shifts rightward and the supply curve for bottled water shifts leftward then the equilibrium a) a) b) c) d) price of bottled water definitely decreases. price of bottled water definitely increases. quantity of bottled water definitely decreases. quantity of bottled water definitely increases. If the demand curve for bottled water shifts rightward and the supply curve for bottled water shifts leftward then the equilibrium a) a) b) c) d) price of bottled water definitely decreases. price of bottled water definitely increases. quantity of bottled water definitely decreases. quantity of bottled water definitely increases. 11. Holding a price below its equilibrium level will level a) b) c) d) e) iinsure that everyone obtains the quantity they nsure desire to purchase desire encourage an increased production of the good result in less of the good being consumed eliminate the incentive for black-market eliminate profiteering profiteering result in an excess supply of the good. 11. Holding a price below its equilibrium level will level a) b) c) d) e) iinsure that everyone obtains the quantity they nsure desire to purchase desire encourage an increased production of the good result in less of the good being consumed eliminate the incentive for black-market eliminate profiteering profiteering result in an excess supply of the good. 12. 12. If the supply curve is a straight line going through the origin, then which of the following statements are true following I. The price elasticity of supply is I. constant and equal to one. constant II. An increase in demand will keep II. consumer spending constant. consumer a) b) c) d) Both statements are true. Neither statement is true. Only I is true. Only II is true. 12. 12. If the supply curve is a straight line going through the origin, then which of the following statements are true following I. The price elasticity of supply is I. constant and equal to one. constant II. An increase in demand will keep II. consumer spending constant. consumer a) b) c) d) Both statements are true. Neither statement is true. Only I is true. Only II is true. ...
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This note was uploaded on 12/18/2010 for the course ECONOMICS 120 taught by Professor Mesta during the Spring '10 term at Wilfred Laurier University .

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