a)Define economic theory and give an example of a ceteris paribus problem
b)Discuss why the balance of payments report is useful to the Ministry of Finance.
c)Differentiate between:
i)normative economics and positive economics
ii)price elasticity of demand and income elasticity of demand
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What are the main similarities and differences between QE in Australia, in the UK, in Japan; in the Eurozone; and in the USA.

(comparing to Australia)

How should the airline respond when presented with an overweight bag (more than 42 pounds)?

Explain whether or not each of the following should be considered a variable cost that increases with each additional airline seat sale: baggage costs, crew costs, commissions on ticket sales, airport parking costs, food costs, and additional fuel costs from passenger weight.

If jet fuel prices reverse their upward trend and begin to decline, fuel surcharges based on average variable cost will catch up with and surpass marginal costs. How should the airlines respond then?

What are the economic implications of China’s recent history of devaluing the yuan? Specifically, what are the negative implications to major trading partners like Japan and the United States? Are there negative downstream impacts?

a(1). "Last year the United Auto Workers Union successfully negotiated a ten percent increase in the wages for its workers. This increase in the wage rate will cause an increase in the demand for automobiles, since many consumers now have greater incomes, but also a decrease in the supply of automobiles because the cost of production has increased.” Explain what is wrong with the statement. Provide a clear explanation in the box below.

b.(1).Marcia, says “Economists are silly. Clearly when the price of candy rises, I buy less candy, so my demand for candy will fall.” What mistake has Marcia made from an economist’s perspective?Provide a clear explanation in the box below.

c (3). Over the last 20 years the costs of raw tobacco have increased, and advertising campaigns have warned Americans about the dangers of smoking tobacco. More recently, the higher cigarette prices have led to an increase in the price of another potentially harmful activity, vaping. Use demand-supply analysis to explain what has happened in both the cigarette market and the vaping market. Provide a clear explanation in the box below.

1. Using game theory, illustrate why it is difficult to finance public goods. Discuss the players, the strategies, and the payoff matrix. How might one solve the problem of financing public goods? Provide examples.

Questions: After reading the article. Explain how cheap gas can affect the suburban housing market. Use a graph to show how cheap gas affects the suburban housing market.

It’s no mystery why high gas prices can influence where people live. The more gas costs, the less consumers want to drive. That may explain why five percent of people who moved between 2012 and 2013 said they did so to get closer to work or cut down on commuting hassles. Now, there are studies suggesting that gas prices affect the housing market in other ways. They may influence where builders decide to build, one study concluded. They may even impact home values in substantial ways, according to another. And the authors say that’s true whether gas prices are rising or falling. These days they’re falling, of course. They have been for 11 consecutive weeks, tumbling to $2.55 per gallon as of Dec. 14, the lowest price since October 2009, according to the Energy Information Administration. Next year, the amount U.S. households spend on gas and motor oil is on track to be the lowest in 11 years. So how does all of this affect the housing market? Raven Molloy, a senior economist at the Federal Reserve Board, and Hui Shan, an economist at Goldman Sachs, analyzed the effect of gas price changes in hundreds of local markets from 1981 to 2008. They concluded that a 10 percent rise in gas prices leads to a 10 percent drop in construction after four years in areas that are far from job centers compared to closer¬in locations. Demand for homes in these outlying areas wanes when gas prices increase, and builders respond accordingly, recognizing that this will make it harder to sell homes there. Given that the study spans nearly three decades, it factored in the effects of sharp gas price increases (1980, 2000, from 2003 to 2005 and in 2008) as well as decreases (1986, 1998 and 2009.) It found evidence that a drop in gas prices will raise demand for homes in suburbs far from employment hubs. But the effects won't be immediate, if they take place at all, said Robert Denk, a senior economist at the National Association of Home Builders. "It would take time to play out," Denk said. "The builders would have to believe that this is a longer term phenomenon before they act on it." As for the impact on home values, that shows up only in areas where there are regulatory or land constraints, the study said. In other words, home values are affected in regions where builders can’t simply build wherever the demand takes them, whether that be far¬flung suburbs or closer in locations. A study released by the Brookings Institution earlier this month picks up on that front. The study delved into home sales that took place from 1978 through 2010 in Nevada’s Clark County – home to the Las Vegas metropolitan area, where 32 percent of the land is undevelopable, in part due to mountainous terrain. It found that a 10 percent increase in gas prices from the historical average can shift average home values within a range of about $13,000. Values rose by up to $5,600 for homes near the area’s urban centers, and dropped by about $7,800 on average for homes that are farther out, according to the authors Adele C. Morris of the Brookings Institution and Helen R. Neill of the University of Nevada. “What this means for today is that if people expect the low gas prices to persist, it’s going to make homes in the outer areas more attractive than they would be if gas prices had remained high,” Morris said in an interview. “The question we ask is how much more do people care about where they live when gas prices are high and how much less do they care when gas prices are low. We’re looking at relative changes.” Whether home values rise or fall in reaction to gas prices may not have to do solely with commuting times, Morris said. There are notable differences in the effect of gas prices across adjacent neighborhoods, which suggests other factors may be at play. It could be that higher-income neighborhoods are less concerned about commuting costs, and therefore the property values there are less sensitive to large changes in gas prices.

The Covid19 pandemic has caused major shifts in supply and demand for various goods and services worldwide in only a few months. Applying the supply and demand model and market equilibrium framework discussed in this module:

1) Explain why it was so difficult to find face masks during the first few months of the pandemic or why you could only find them on secondary markets (ebay, amazon, etc.) for very high prices. Was it a change in demand, supply, or both that caused this to happen? Explain.

2) Explain why the price of gasoline has dropped significantly in the past few months since the pandemic began. Was it a change in demand, supply, or both that caused this to happen? Explain.

Comparative Statics: Consider the market for taxi service in San Francisco. Explain how the following events ∗∗ will affect the equilibrium (? , ? ) in the taxi market . Consider each case separately. Use supply and demand curves to defend your answer graphically.

a) Bus fares increase after a strike by bus drivers.

b) Taxi drivers must pass a competency test, and one-third fail.

c. The price of a taxi permit increases and consumer income increases. Assume that taxi service is a normal good. Show each event on separate graphs. After you perform comparative statics for each graph, determine the overall net effect on P* and Q*. Note, if you get conflicting results, e.g. Price increases and decreases, then the net result is indeterminate.

d) Half the downtown parking lots are converted to office buildings.

(filing status: single and she is her only dependent) tax calculations are as follows assuming a 2018 tax year). 2018 standard deduction amount is $6,500 and the exemption amount for 2018 is $4150. Bella s single and will claim herself as an exemption. She has a house mortgage interest amount of $4,300, property taxes of $3,900, and made $4,950 in charitable contributions during the year. All these are itemized deductions.

            Wages, salaries, and tips                                                           $38,700

            Plus: Interest income                                                                        142

                        Gross income                                                     $38,842

            Less: Adjustments to (gross) income                                                    0

                        Adjusted gross income                                                  $38,842

            Less: Standard deduction _____

            Less: Exemption (claim one only) _____

                        Taxable income $

            Tax liability                                                                             $

            Less: Taxes withheld                                                                4,150.00

                        Tax due                                                                      $ __________

1.          If Bella itemizes her deductions and uses one exemption, will she owe additional taxes for 2018? If she has underpaid by too great an amount, she may also be subject to an underpayment penalty regardless of whether she files her return by April 15 or not. Refer to IRS Publication 505.

2.         Recalculate Bella's income tax for 2018 taxes without itemizing her deductions and using the same tax schedule. Using President Trump's new income tax law adjustment an increase in the standard deduction and no personal exemption. (2018 Standard deduction = $12,000, Personal exemption = $0). The first $9,525 of her income is taxed at a10% tax rate, the amount over $9,525 is taxed at 12%). Is she eligible for a refund? Which income tax calculation will result in a lower federal income tax for Bella?

Consider the following scenario. Carole is an animal-rights activist who owns a sanctuary called Large Cat Rescue, while Joe owns a zoo called Tiger Kingdom. There is an ongoing feud between them with Carole alleging abuse of animals in Tiger Kingdom while Joe counteracts with similar accusations about Large Cat Rescue. In a recent escalation of this feud, Carole sues Joe for making defamatory comments about her personal life on a social media forum called Rumorville. Five weeks from now a judge will decide whether or not Joe is guilty. If found guilty Joe will be ordered to pay $4 million in damages to Carole; if not, there will be no payment. However, Carole and Joe can settle out of court in the four weeks prior to the hearing, in which case they do not go to court in Week 5. The negotiation for settlement proceeds as follows. In each week ?? ∈ {1, 2,3, 4} Carole or Joe can make a settlement offer St and the other party has to decide whether to accept it. Carole and Joe take turns making offers; Carole makes offers in weeks 1 and 3, while Joe gets his turn in weeks 2 and 4. If the offer is accepted in any particular week, the game ends and Joe pays St (the amount decided in week t) to Carole. Carole is risk-averse and her utility from receiving payment x is (x)1/2. She does not discount future payoffs and does not incur any costs of negotiation for going to court. Joe, however, is riskneutral and needs to pay a small fee c > 0 to lawyers for every week the negotiations take place. Use backward induction to analyse the above scenario. For the purpose of your analysis you may assume a probability p=0.7 of Carole winning the court case if the negotiations are not settled.

word limit 1500-2000

1. If, for an imaginary closed economy, investment amounts to $12,000 and the government is running a $2,000 deficit, then private saving be equal to?

2.In a closed economy, GDP is $1000, government purchases are $200, and consumption is $700. If the government has a budget surplus of $25. Private savings is equal to [_______] and investment is equal to [______]

Group of answer choices

300...25

300...225

100....100

75....100

3. Suppose Intel (a U.S.-owned company) builds a factory in Taiwan to produce processor chips. What is this an example of?

Group of answer choices

Inward-oriented policies

Foreign portfolio investment

Foreign direct investment

Crowding out