Homework 2

Homework 2 - models). 3. What is an opportunity cost?...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Temple University Department of Economics Homework #2 Due: Wednesday, Sept. 22 Instructor: Ken Chesoli Economics 1101 – Macroeconomic principles Please answer all questions clearly and concisely. 1. Define and discuss the importance of the production possibility frontier (PPF) in macroeconomics. How is it related to the concept of “economic growth”? (Hint: explain everything you know about PPF including an explanation of what would make a PPF to shift outwards). 2. By means of graphs, please show and discuss how a recall of some Toyota models would affect the equilibrium prices and quantities for some comparable (substitute) General Motors cars in the US (hint: use arbitrary figures for illustration purposes and be thorough in your explanation. Also, be sure to draw two sets of graphs one for Toyota and another for GM model, and explain the movements in demand and or supply for both
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: models). 3. What is an opportunity cost? Discuss how opportunity cost is used by economists in making policy recommendations (3 paragraphs hint: gains of trade) 4. What is the difference between change in demand and change in quantity demanded? Give factors that contribute to both demand and quantity demanded. 5. Consider the market for Pizza. Suppose that the market demand for pizza is given by the equation Q d = 300 - 20P d (or P d = 15 - Q d ) and market supply for pizza is given by Q s = 20P s 100, (or P s = 5 + Q s ), where Q d is quantity demanded and Q s is quantity supplied, P s is the price producers receive and P d is the price consumers pay for a pizza. (i) In equilibrium, how many pizzas would be sold, and at what price? (ii) What would happen if suppliers set the price at $15? Explain your answer....
View Full Document

This note was uploaded on 04/15/2011 for the course ECON 1101 taught by Professor Rappoport during the Fall '08 term at Temple.

Ask a homework question - tutors are online