Following an unanticipated dollar appreciation, would you recommend that a domestic manufacturing company such as Cummins Engine outsource some of its manufacturing abroad? No or Yes

Purchasing Power Parity

1. (1 Point) Define the Law of One Price (LOOP), the Absolute Pur- chasing Power Parity (Abs. PPP), and the Relative Purchasing Power Parity (Rel. PPP).

2. (4 Points) Prove mathematically that the LOOP implies the Abs. PPP and the Rel. PPP.

3. (5 Points) Discuss how the LOOP, Abs. PPP, and Rel. PPP can fail.

1.

Suppose a firm pays labor (L) a wage rate (w) of $10 and capital (K) a rental rate (r) of $25.

A.

Write an equation for the isocost line and find i

ts slope. Then, draw a graph (with Labor on

the horizontal axis) of the isocost lines for Total Costs of $200 and $300.

B.

Suppose a firm wants to produce 200 units and can do so with the following combinations of

labor and capital

:

(5 L, 10 K); (10 L, 4 K

)

;

or (25 L, 2 K).

Using this information, o

n the same

graph as Part (A), draw

an approximate

isoquant for 200 units, making sure to show the

cost

-

minimizing output choice.

The conditions underlying supply and demand for labor have been different in Europe from that in the USA, in a way that has created a much higher natural rate of unemployment. Discuss various factors which contribute to this

• How will the structure of the labor market, including the gig economy effect consumer confidence? How will it effect the growth of wealth of households? How will it effect investment spending?

George has been selling 8,000 T-shirts per month for $9.50. When he increased the price to $10.50, he sold only 5,000 T-shirts.

Which of the following best approximates the price elasticity of demand?

-4.1538

-5.0769

-4.6154

-3.6923

Suppose George's marginal cost is $4 per shirt.

Before the price change, George's initial price markup over marginal cost was approximately ( 0.6368 OR 0.5211 OR 0.2895 OR 0.5789) . George's desired markup is   .

Since George's initial markup, or actual margin, was( LESS or GREATER) than his desired margin, raising the price was ( profitable or not profitable) .

Should the government be downsized? Which functions should be cut back? Which ones should be expanded?

Briefly describe the purpose of “blacklisting” and other authoritarian measures during Red Scares in the United States.

QUESTION 1

1. The law of diminishing marginal productivity pertains to_____:

   	a.	the short run.
   	b.	the long run.
   	c.	both the short run and the long run.
   	d.	the short run for small firms, and the long run for large firms.

1 points   

QUESTION 2

1. Assume that you own a sole proprietorship. Your first year earnings were $75,000, and your explicit costs were $55,000.  If you could have worked at another establishment and earned $25,000, which of the following is true?

   	a.	Your firm earned an economic profit of $20,000.
   	b.	Your firm's total implicit costs were $80,000.
   	c.	Your firm sustained an economic loss of $5,000.
   	d.	Your firm's total costs are $100,000.

1 points   

QUESTION 3

1. Which of the following is true regarding accounting profit?

   	a.	It is typically smaller than economic profit.
   	b.	It includes all explicit and implicit cost of production.
   	c.	It includes depreciation.
   	d.	All of the above.

1 points   

QUESTION 4

1. Marginal cost is understood as the change in__________ when producing one more unit of output. In the short run, marginal cost can also be determined by the change in__________ when producing one more unit of output.

   	a.	variable cost; fixed cost
   	b.	total cost; fixed cost
   	c.	fixed cost; variable cost
   	d.	total cost; variable cost

1 points   

QUESTION 5

1. Which of the following are characteristics of a perfectly competitive market?

   	a.	Firms are price takers.
   	b.	Firms produce identical or nearly identical products.
   	c.	Firms can enter the market without any restrictions.
   	d.	All of the above.

1 points   

QUESTION 6

1. An organization with 50 employees will add 10 employees next month. This is_____:

   	a.	a long run decision.
   	b.	a long run and a short run decision.
   	c.	a short run decision.
   	d.	none of the above.

1 points   

QUESTION 7

1. Fixed inputs are_____:

   	a.	those inputs to production that have a fixed price.
   	b.	those inputs to production that result in a fixed variable product.
   	c.	those inputs to production that cannot be varied in the short run.
   	d.	those inputs to production that have a fixed market.

1 points   

QUESTION 8

1. When deciding whether to continue operations or shutdown, a perfectly competitive firm should_____:

   	a.	continue operations if the price of the firm's product falls below the minimum average variable cost.
   	b.	shut down if the price of the firm's product falls below the minimum average variable cost.
   	c.	continue operations if the marginal cost of a new invention for the firm surpasses average variable cost.
   	d.	shut down if it can cover all of its costs, but only at a diminishing marginal rate.

1 points   

QUESTION 9

1. If the total output rises while the cost per unit fails, a firm is understood to be enjoying_____:

   	a.	increased profits.
   	b.	economies of scale.
   	c.	maximum efficiency.
   	d.	all of the above.

1 points   

QUESTION 10

1. Firms that compete in perfectly competitive markets must decide_____:

   	a.	the quantity to produce.
   	b.	the price to charge.
   	c.	the price to charge and the quantity to produce.
   	d.	none of the above.

3. NJ wants to attract businesses to move to NJ from other states. It offers firms a tax break on profits earned in NJ over the next 10 years. How could you empirically test whether this tax break has any effect?

Discuss how a layperson's view of trade differs from the view of economists. List and explain at least two examples

Developing A Program For Prevention of STDS For this exercise, you need to play the role of an HIV/AIDS prevention specialist and help design a program for your culture to promote condom use. You need to answer the following questions: 1. What are some of the cultural barriers that might inhibit condom use? Are any of them similar to those in Mexico? 2. What are some measures that you would suggest to help people who are sexually active overcome these barriers?

1. What factors caused American business to develop into a mixed economic system rather than some other type of economic system?
2. Discuss this statement: “Business competition encourages improved product quality and increased customer satisfaction.”

Differentiate between resources are not used effectively and they are not used sustainably.