Economics Assignment In Tutorial Library

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TITLE: Economics Assignment

CLASS / COURSE: Economics

QUESTION DESCRIPTION:

Economics Assignment

 

1. Assume you are the manager of a perfectly competitive firm whose short run cost is TC = 100 + 160Q + 3Q2. If the market price is $196, what should you do? (Points :2)
       produce 5 units and continue operating
       produce 6 units and continue operating
       produce zero units (i.e., shut down)
       Cannot be determined from the above information.
 

 



2. The following are possible examples of price discrimination, except (Points :2)
       prices in export markets are lower than for identical products in the domestic market.
       senior citizens pay lower fares on public transportation than younger people at the same time.
       a product sells at a higher price at location A than at location B, because transportation costs are higher from the factory to A.
       subscription prices for a professional journal are higher when bought by a library than when bought by an individual.


3. In order that price discrimination can exist, (Points :2)
       markets must be capable of being separated.
       markets must be interdependent.
       different demand price elasticities must exist in different markets.
       demand price elasticities must be identical in all markets.
       Both A and C.


4. Which of the following industries is most likely to represent the Monopolistic Competition market structure? (Points :2)
       pharmaceuticals
       tobacco products
       hair salons
       farm equipment


5. In the short run a firm should shut down if it cannot (Points :2)
       make normal profits.
       make economic profits.
       cover its variable costs.
       cover its fixed costs.


6. The fact that a perfectly competitive firm has a perfectly elastic demand curve means (Points :2)
       there is no limit to the firm's profits.
       there is no limit to the firm's revenues.
       that it can sell all it wants at any price.
       None of the above


7. Using demand and supply analysis to assist you, what are the effects on the exchange rate between the British pound and the Japanese yen from: a decrease in the price of British goods (Points :2)
       The yen depreciates, and the pound appreciates
       The yen appreciates, and the pound depreciates
       The yen depreciates, and the pound depreciates
       The yen appreciates, and the pound appreciates


8. Using demand and supply analysis to assist you, what are the effects on the exchange rate between the British pound and the Japanese yen from: a decrease in British interest rates (Points :2)
       The yen depreciates, and the pound appreciates
       The yen appreciates, and the pound depreciates
       The yen depreciates, and the pound depreciates
       The yen appreciates, and the pound appreciates


9. Which of the following will happen when the Federal Reserve buys bonds from the public in the open market and cash in the hands of the public does not change? (Points :2)
       the required reserve ratio will increase
       the money supply will decrease
       the deposits of commercial banks will decline
       commercial bank reserves will increase


10. In a certain year the aggregate amount demanded at the existing price level consists of $100 billion of consumption, $40 billion of investment, $10 billion of net exports, and $20 billion of government purchases. Full-employment GDP is $120 billion. To obtain price level stability under these conditions the government should: (Points :2)
       increase tax rates and reduce government spending.
       discourage personal saving by reducing the interest rate on government bonds.
       increase government expenditures.
       encourage private investment by reducing corporate income taxes.


11. Suppose that the economy starts at equilibrium and the mpc = 0.8. What would be the effect of a $500 increase in taxes once all the rounds of the multiplier process are complete? (Points :2)
       An increase of $500 in taxes causes equilibrium output to decrease by 1000.
       An increase of $500 in taxes causes equilibrium output to decrease by 2000.
       An increase of $500 in taxes causes equilibrium output to increase by 2000.
       An increase of $500 in taxes causes equilibrium output to decrease by 400.
       An increase of $500 in taxes causes equilibrium output to increase by 400.


12. Assume that the price level is flexible both upward and downward and that the Fed's policy is to keep the price level from either rising or falling. If aggregate supply increases in the economy, the Fed: (Points :2)
       will have to increase interest rates to keep the price level from falling.
       will have to reduce the money supply to keep the price level from rising.
       will have to increase the money supply to keep the price level from falling.
       can keep the price level stable without altering the money supply or interest rate.


13. Other things equal, a depreciation of the U.S. dollar would: (Points :2)
       increase the price of imported resources and decrease aggregate supply.
       decrease net exports and aggregate demand.
       increase consumption, investment, net export, and government spending.
       decrease aggregate supply and decrease aggregate demand.


14. Suppose the value of the French Franc in terms of the dollar is:
50 on October 12 , and 44 on October 17 . By how much has the Franc appreciated or depreciated against the dollar? (Points :2)
       The value of the Franc rises against dollar by 12
       The Franc has actually depreciated by 12%.
       The Franc has remained constant relative to the dollar
       The dollar has actually appreciated by 12%.


15. Suppose the Value of French Franc in terms of the dollar is 40 on October 12 and 45 on October 17. By how much has the Franc appreciated or depreciated against the dollar? (Points :2)
       The Franc has depreciated by 12.5%.
       The Franc has remained constant relative to the dollar
       The Franc has appreciated by 45%
       The Franc has depreciated by 45%
       The dollar has depreciated by 12.5%


16. An increase in the marginal propensity to …… will decrease the size of the expenditure multiplier (a) and therefore the IS-curve will shift to the …… and become steeper. If people save more and spend less, firms will experience an increase in unintended inventories. Firms will respond by decreasing production and national income will 3…… (Points :2)
       save, left, decrease.
       consume, right, increase.
       save, left, increase.
       consume, left, decrease
       save, right, decrease


17. In economic analysis, any amount of profit earned above zero is considered "above normal" because (Points :2)
       normally firms are supposed to earn zero profit.
       this would indicate that the firm's revenue exceeded both its accounting and opportunity cost.
       this would indicate that the firm was at least earning a profit equal to its opportunity cost.
       this would indicate that the firm's revenue exceeded its accounting cost.


18. Which of the following identities is FALSE? (Points :2)
       Y =C + I + G + NX
       YD =  Y - TA + TR
       BS =TA - TR - G
       I - S =(G - TA + TR) + NX
       S + TA - TR = I + G + NX


19. Assume that GDP = 4,800, consumption = 3,400, private domestic savings = 400, government purchases = 1,200, and net exports = -120. Which of the following is true? (Points :2)
       disposable income is 3,800
       private domestic investment is 320
       the budget deficit is 200
       all of the above
       only A) and C)


20. If the government increases taxes, which of the following is LEAST likely to occur? (Points :2)
       a decrease in private domestic saving
       a decrease in consumption
       an increase in private domestic investment
       a decrease in net exports
       a decrease in national income


21. Assume you deplete your savings to buy a new sofa and some government bonds and then take a vacation in a foreign country. Which of the following is true? (Points :2)
       consumption will increase
       net exports will increase
       government purchases will increase
       investment will increase
       all of the above


22. Assume government purchases = 1,500, the budget deficit = 120, private domestic saving = 1,220, consumption = 4,800, the trade deficit = 90, and transfer payments = 0. Which of the following is true? (Points :2)
       private domestic investment is $1,190
       national income is $7,400
       disposable income is $6,020
       all of the above
       only A) and C)


23. Assume that GDP = 4,800, consumption = 3,400, private domestic savings = 400, government purchases = 1,200, and net exports = -120. Which of the following is true? (Points :2)
       disposable income is 3,800
       private domestic investment is 320
       the budget deficit is 200
       all of the above
       only A) and C)


24. In the IS-LM model, the interest rate serves as a link between (Points :2)
       household saving and business investment
       government spending and consumer spending
       actions of the central bank and changes in consumer spending
       the goods market and the assets market
       domestic markets and foreign markets


25. Which of the following will NOT cause a shift of the IS-curve? (Points :2)
       a change in transfer payments
       a change in taxes
       a change in money demand
       a change in business and consumer confidence
       a change in autonomous saving


26. 

You have been appointed “Global Manager” of a firm that has two plants, one in the United States and one in Mexico. Assume, you cannot change the size of the plants or the amount of capital equipment. The wage in Mexico is $5. The wage in the U.S. is $20. Given current employment, the marginal product of the last worker in Mexico is 100, and the marginal product of the last worker in the U.S. is 500.

a. Is the firm maximizing output relative to its labor cost? Show how you know.

b. If it is not, what should the firm do?

27. 

1.     You've been hired as a managing consultant by an unprofitable firm to determine whether it should shut down its operation. The firm currently uses 70 workers to produce 300 units of output per day. The daily wage (per worker) is $100, and the price of the firm's output is $30. The cost of other variable inputs is $500 per day. Although you don't know the firm's fixed cost, you know that it is high enough that the firm's total costs exceed its total revenue. You know that the marginal cost of the last unit is $30. Should the firm continue to operate at a loss? Carefully explain your answer. (show all your calculations).

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SUBJECTS / CATEGORIES:
1. Finance
2. Business Economics
3. Economics
4. Microeconomics
5. Macroeconomics

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