12. If demand is elastic

A. A two percent increase in price will result in less than a two percent decrease in the quantity demanded

B. A two percent increase in price will result in a two percent decrease in the quantity demanded

C. A two percent increase in price will result in more than a two percent increase in the quantity demanded

D. A two percent increase in price will result in less than a two percent increase in the quantity demanded

E. None of the above is correct

You are in charge of a manufacturing firm that is contracted to manufacture molds for producing jewelry for a leading retail store. Your firm did a market assessment last year for 200k to determine what is involved in producing the molds, and have received a total of 100k over the past two years in contract work similar to this. This new contract that you just signed pays you to produce 50 simple jewelry designs, and 5 complex jewelry designs. Your internal costs to do designs are: 518.2 in material for each mold (simple or complex) 198.48 in labor costs for each simple mold $523.1 in labor costs for each complex mold A fixed overhead cost of $200 per mold for the simple designs and $500 per mold for the complex designs In addition, the complex molds require an artist who you have to hire for $113.52 per hour to process the molds. You can assume that the average complex part requires 10 hours of labor per mold. If the contract pays you 100k for this, what is the net profit of the contract? Type this answer in the box below. If you repeat this operation each year and your costs stay the same (i.e. as above) for 5 years, but the contract price increases by 10k per year, what is the present worth of this situation over the 5 years if your cost of capital is 5%?

You are the lead designer for a firm that produces casting patterns for investment casting. There has been a recent increase in requests for castings that require an artist to sculpt molds. The artists asks for the following:

• For each simple mold made, he wants $1000 in material costs and wants $4,272 in labor for his skills.
• For each complex mold made, he asks for a labor cost of $6200 + $133/hour of his time required in finishing. For complex mold material costs, he wants $1200 +8.63% of the total labor per mold

He’s either willing to charge you per part, or willing to charge you a flat rate of 100k to do all the parts you want. If you produce an equal number of simple and complex parts, and each complex part requires an average of 4 hours of finishing time, how many parts of each type would you need to make to make it more worthwhile to pay him the flat rate?

**Hint: this is a break-even problem

1.If a firm expects a blockage of funds implemented by a host government to be temporary, which of the following can be considered as a forced reinvestment?

Select one:

a. a lumber cutting company decides to invest in a paper mill with blocked funds

b. None

c. An automobile company reinvests its funds by buying businesses who supply it with parts and showrooms.

d. Investing in local short-term debt instruments and short-term loans

2.There are various determinants of the foreign exchange rate. Which of the approaches postulates that the FX rate is determined by demand and supply of different types of financial assets?

Select one:

a. balance of payments

b. asset market

c. law of one price

d. monetary

1. If a firm moves from one point on a production isoquant to another point on the same isoquant, which of the following will certainly not happen?

options:

1-) A change in the level of output

2-) A change in the marginal products of the inputs

3-) A change in the rate of technical substitution

4-) A change in profitability

5-) All of these.

2. When Farmer Bob applies N pounds of fertilizer per acre, the marginal product of fertilizer is 1 − [1/N] bushels of corn. If the price of corn is $1 per bushel and the price of fertilizer is $0.75 per pound, then how many pounds of fertilizer per acre should Farmer Bob use in order to maximize his profits?

1-) 12

2-) 25

3-) 50

4-) 75

5-) None of these are correct.

3.A profit maximizing monopolist sets:

1-) average cost equal to price

2-) marginal cost equal to price

3-) price equal to marginal revenue

4-) marginal cost equal to marginal revenue

4. If the production function is f(L, K) = aL +2aK where a > 0 is a constant, L is for Labor and K is for Kapital, then the ratio of Marginal Product of Labor to Marginal Product of Capital is:

1-) 1/2

2-) 1

3-) 5

4-) 2

None of these are correct.

Comparative and absolute advantage

Dmitri and Frances are farmers. Each one owns a 12-acre plot of land. The following table shows the amount of rye and corn each farmer can produce per year on a given acre. Each farmer chooses whether to devote all acres to producing rye or corn or to produce rye on some of the land and corn on the rest.

Q3. Has Saudi Arabia changed in terms of type of economy in the last 10 years? How?

100 words each answer but please do not answer in professional way.

3.Consider the market for gasoline in the U.S. Suppose that the price elasticity of demand has been estimated to be 0.3,while the priceelasticity of supply is estimated to be 0.6. Answer the following questions.

a)Construct a supply-and-demand diagram that illustrates the free-market equilibrium. How much do buyers pay? How much do sellers receive? Is there a difference between the price paid by buyers and the price received by sellers?

b)Suppose the federal government imposes a gasoline tax of $0.50 per gallon. Construct a supply-and-demand diagram that illustrates the effect of the tax on the market for gasoline. How does the tax impactthe price buyers pay? How about the effective price received by sellers? Is there a difference between the price paid by buyers and the price received by sellers? What happens to the number of transactions between buyers and sellers?

c)How is the gasoline tax distributed between buyers and sellers? That is, do buyers pay more or less of the $0.50 per-unit tax than sellers? Prove your answer with the pre-tax and post-tax equilibrium prices paid by buyers and received by sellers from (b) part.

d)Identify the areas of the graph that represent tax revenue and deadweight loss? Describe the intuition behind the concept of deadweight loss.

e)If the government repealed the gasoline tax, how would this change affect the price paid by buyers and the price received by sellers? What would happen to the deadweight loss?

10. The free-rider dilemma refers to a situation in which an individual can consume a good or service without having to pay for it. True/False?

15. The Great Depression

Multiple Choice

• was the most severe recession since the Civil War, even though it lasted only 18 months.

• was a severe and prolonged reduction in output and employment for the United States during the 1930s.

• was a severe and prolonged reduction in output and employment for the United States during the 1980s just prior to the long economic expansion of the 1990s.

• is another name for the economic downturn that followed World War II.

22. Public goods

Multiple Choice

• include most goods and services that the market produces.

• lead to the pay-as-you-go problem.

• by definition, must be produced by the government.

• can be consumed by more than one person at the same time.

24. Which of the following individuals is frictionally unemployed?

Multiple Choice

• Jennifer has not been able to find a job because she lacks computer skills.

• Jose has decided to stop looking for work in order to return to school.

• James quit his teaching job in Virginia in order to relocate to Hawaii.

• Jai Lynn lost her job because her employer had to reduce staff during the recession.

1. Scenario 1: Suppose there are two countries that have the same nominal GDP. Do they have the same standard of living? Why or why not?
2. Scenario 2: Suppose there are two countries and nominal GDP in one country is twice as large as the other country. Do they have the same standard of living? Why or why not?

Andrew and Beth can each spend 10 hours a day making bread or making shoes. Andrew makes 2 shoes an hour and Beth 3 shoes an hour. Andrew can bake 10 loaves an hour and Beth 9 loaves an hour.

What is A's O.Cost making shoes in terms of bread?

What is A's O.cost of bread in terms of shoes?

Who has the relative (comparative) advantage in making shoes?

Who has the relative (comparative) advantage in making bread?

1. The table below contains national income data for Macroeconomics Land:

1. Fill in the missing data in the table.
2. Which year is the base year and what role does this year play in determining real GDP?

Explain the following situations by applying the concept of opportunity cost.

a) More people choose to get graduate degrees when the job market is poor.

b) More people choose to do their own home repairs when the economy is slow and hourly wages are down.

c) There are more parks in suburban than in urban areas.

d) Convenience stores, which have higher prices than supermarkets, cater to busy people.

e) Fewer students enroll in classes that meet before 10:00 am.

Suppose there are two countries that have the same nominal GDP. Do they have the same standard of living? Why or why not?

Scenario 2: Suppose there are two countries and nominal GDP in one country is twice as large as the other country. Do they have the same standard of living? Why or why not?