Short-answer Questions and Problems: Be thorough, clear, and show your work.

1.) In a perfectly competitive market, price is equal to marginal cost in the long run. Explain why this is not true for a monopolist or for firms in a monopolistically competitive market.

2.) Suppose Pizza Hut raises its price by 8%, and as a result, the demand for Little Caesar’s pizza goes up by 4%.

a.) What is the cross-price elasticity of demand for Pizza Hut and Little Caesar’s?

b.) Does your answer to part a indicate that these products substitutes or complements? Explain.

c.) What could Pizza Hut do to make it more likely that that they would increase their total revenue even after this price increase? (Draw only upon the material in chapters 11 and 12 for your answer.)

3.) Briefly explain one idea from microeconomics (a concept, a claim, a model, …) that you did not know before taking this course and that you found interesting or useful. Briefly explain the idea and briefly explain why you find it interesting or useful.

4.) Give an example of a Prisoner’s Dilemma situation. Clearly explain the situation, including the strategies available, the dominant strategy for each side, and the Nash equilibrium (i.e., the outcome that is most likely). Clearly explain why that outcome is most likely. Use a matrix to present your example very clearly (feel free to draw this matrix using Word or attach a picture drawn by hand). Offer two suggestions on how the participants could get out of this situation to their mutual benefit—i.e., how they could end up in the result that benefits both.

There is nothing more on this paper. What do you need more on?

The local indigenous communities will be relocated from the area the houses are built upon. The leaders of the communities object, but their combined contribution to the market economy (measured with GDP) is negligible. Using internet research discuss the weaknesses of GDP as a measure of welfare. Describe the three parts to Wight’s taxonomy of ethical action and apply it to the decision whether to go ahead with the project

How does culture affect the way people do business?

You need to make it clear what culture means to you before you start to discuss the question.

6.    Suppose an economy under fixed (pegged) exchange rates is currently facing:

1. a balanced current account (NX = 0),
   2. a negative output gap (excess unemployment), and
   3. a balanced budget.

1. Using an NX/ (S-I) model depict the above situation in relation to the internal and external balance diagrammatically.

2. Now suppose as an advisor to the government your recommendation is to employ an expenditure-changing policy to attain the Internal Balance. Explain in details what this policy is made up and what the consequences of your recommendations will be. Show diagrammatically and explain fully.

3. In light of your answer to part (b) would you agree with this statement? “A trade deficit and low savings go hand in hand.” Evaluate fully.

4. Defend this proposition “attaining the two policy objectives of internal and external balance requires two polices”. Explain and illustrate diagrammatically.

Suppose the U.S. economy was in both short-run and long-run equilibrium, until the economy experienced inflation.

a. Which policy would be consistent with the goals of monetary policy during this time?

• The Fed repos $25 billion worth of Treasury bonds to non-bank financial firms.

• The Fed reduces the discount rate from 7 percent to 5 percent.

• The Fed reduces the reserve ratio from 20 percent to 15 percent.

• The Fed sells securities worth $100 million to financial institutions.

21. The price elasticity of demand for Dell computers is estimated to currently be –3. Assuming that this estimate is correct, which of the following is true?

A. Total revenue from the sale of its computers will increase this year if Dell raises its prices this year.

B. If Dell lowers the price of its computers, the total revenue from sale of its computers will decrease this year.

C. There will be no effect on its total revenue from the sale of its computers this year if Dell lowers its prices.

D. If Dell lowers the price of its computers, the total revenue from the sale of computers will increase this year.

22. Suppose you run a movie theater and want to increase the total revenue you take in during daytime showings of movies. You can increase your revenue by

A. lowering the price of tickets if the demand for tickets is elastic.

B. lowering the price of tickets if the demand for tickets is inelastic.

C. lowering the price of tickets if the demand for tickets is unit elastic.

D. raising the price of tickets if the demand is inelastic. E. either A or D. 11

23. The long-run supply curve of new automobiles is perfectly elastic. If a 10 percent excise tax is levied on automobiles and collected from manufacturers, then in the long run, other things being equal,

A. the tax will be fully shifted to buyers of automobiles as the market equilibrium price of automobiles increases by 10 percent.

B. the tax will be borne entirely by manufacturers and the net price they receive from selling each automobile will be 10 percent less because of the tax.

C. buyers and sellers of automobiles will share the tax on each automobile.

D. it is not possible to forecast the impact of the tax on the market price of automobiles.

While answering the questions below, assume France is a small country and thus unable to influence the world price. Its demand and supply schedules for washing machines are shown in Table below.

1. Draw the graphs of demand and supply and determine the equilibrium price and quantity.
2. Suppose France imports washing machines at a world price of $100 each. How many washing machines will be produced, consumed, and imported?
3. To protect its producers from foreign competition, suppose the French government levies a specific tariff of $100 on imported washing machines.

(a) Find and show graphically the domestic price of washing machines in France, the quantity of washing machines supplied by French producers, the quantity of washing machines demanded by French consumers, and the amount of import after the tariff is imposed. Explain how the domestic price and quantities changed as compared to the no-tariff situation.

(b) Show graphically and calculate the effects of this tariff on consumers, producers, government, and on the economy as a whole.

REWORD THE TEXT TO 6TH GRADE LEVEL DO NOT USE ONLINE SOURCES PLEASE

• Obama was expected to give his keynote speech on Tuesday night 27 July. Before his presentation, some Obama advisors were worried, because it was the first time he had used a teleprompter.Obama soon went into a brief autobiographical session talking about his grand-dad made a living by working as a servant for the British, to his own dad who had got a scholarship so that he could come to the United States. Then talked about his mother's family, explaining his grandfather fighting in World War II under Patton while his grandmother was working and taking care of his mom..  

• He spoke about the simple librety enunciated in the Declaration of Independence, and he said in the 2004 election he thought was a time to reassure these values and remember that "We have more work to do." He then went on to mention several Americans he met who weren’t doing good with jobs, healthcare, and education, saying that "they don't expect the government to fix all their problems, but they hope, deep in their hearts, that with just a small change in priorities, we can ensure that every child in America has a fair shot at life and that the doors in opportunity remain open to all.In the next piece of his speech, Obama addressed John Kerry, stating his core principles and convictions on a variety of topics, interrupted by a tale of a young Marine he had met and affirmed that when military action is conducted, the families and soldiers involved must be looked after and that there is a duty to never go to war without adequate troops to win the war, secure peace and gain world respect. "Obama subsequently returned to Kerry and expressed his determination to keep America safe. Obama then discussed the notions of community and cohesion in America that individuals suffering elsewhere affects us even though we are not directly involved in it.

A consumer has a total budget of $200. There are two (2) goods that are preferred by the consumer, organic apples and organic bananas. Organic apples retail for $10 per pound and the organic bananas retail for $5 per pound.

a. Derive the Budget constraint equation based on the data above.

b. Discuss (use of graph is not required, given the limitation here), the income and substitution effects of a price change, if the price of apples is reduced by 50%. In other words, how is the consumer better or worse off as a result of the price change, with specific reference to the concepts of income and substitution effects.

c. If you are told that following the 50% price reduction in apples, the quantity of apples consumed increases from 500 to 750 units, calculate the point price elasticity of demand. Discuss the significance of the value of the point elasticity calculated.

d. How would the answer derived in part (c) affect the revenues of the firm?

Other things being equal, which of the following could decrease the average cost of
producing automobiles in the United States?
A. An increase in wages paid to automobile workers.
B. A decrease in the average product of automobile workers.
C. An increase in the price of steel.
D. An increase in the price of automobiles.
E. An increase in the average product of automobile workers.

The law of diminishing marginal returns implies that
A. the marginal product of labor in a factory will increase continually as more workers
are hired in the short run.
B. the average product of labor in a factory will increase at first and then decrease in
the short run as more workers are hired.
C. the average product of labor will continually increase in a factory in the short run as
more workers are hired.
D. the average cost of production will increase at first and then decrease in a factory in
the short run as more is produced per day.

Number of workers
Per week
Output
(Yards of fabric per week)
1 20
2 30
3 37
4 42
5 45
6 47

If the factory is currently employing 4 workers, then which of the following is true?
A. The marginal product of a fifth worker is 3 yards of fabric per week.
B. The marginal product of a fifth worker is 9 yards of fabric per week.
C. The marginal product of a fifth worker is zero.
D. The average product of labor would be 3 yards of fabric when a fifth worker is hired.

If the factory employs 5 workers then which of the following statements is true?
A. The average product of workers is 9 yards of fabric per week.
B. The average product of workers is 15 yards of fabric per week.
C. The marginal product of workers is 9 yards of fabric per week.
D. The marginal product of workers is zero.

A local county in South Carolina is attempting to decide whether to improve the water quality of a nearby lake. An environmental economist consulting for the county is attempting to perform a cost-benefit analysis to determine whether improving the water quality would be a “good” thing. List at least three benefits and three costs that the economist should attempt to include or discuss in their analysis. Explain why each would be a cost or benefit and how we might attempt to measure each.

Countries often implement various trade restrictions in international markets to protect their domestic economies. Suppose a trading partner of the United States imposes a tariff on our goods. What would we expect to happen in the market to measures like prices, quantities of goods exchanged, exchange rates, employment and/or welfare? Can you suggest an alternative policy that might improve the foreign country’s economy without resorting to a tariff?

write and essay/ research paper about unemployment and inflation. How they are related etc...
requirement 2 pages

Outline and explain two basic motivations for government intervention in the economy.

Question 2: Explain how inflation can redistribute income. Why does an unexpected rise in the inflation rate make workers and lenders worse off? Who is made better off? Why does correctly anticipated inflation does not have these distributional effects?