Ethel Simpson owns Fine Lines, a furniture company in Boone, NC. Among other products, Fine Lines produces rocking chairs. Assume this is a competitive industry. Fine Lines’ total cost of producing rocking chairs per day is related to production of rocking chairs per day as follows.

1. Assume the market price is $650 per rocking chair. (In computing quantities, assume that Fine Lines produces only a certain number of completed chairs each day; it does not produce fractions of a chair on any day.)

(1) How many rocking chairs should Fine Lines produce?

(2) How much profit will Fine Lines make?

(3) Draw a graph to illustrate your answer. Your graph should be clearly labeled and should include Fine Lines’ demand for rocking chairs and the ATC, AVC, MC and MR curves, the price Fine Lines is charging, and the quantity of rocking chairs Fine Lines is producing. (I don’t care if you draw to scale, but I do want your graph to show the correct relationships between the cost curves and the market price and among the different cost curves.) Either on your graph or verbally, indicate the area that identifies the profit or loss.

2. Assume the market price falls to $450. Answer the same 3 questions I asked in part A.

3. Assume the market price falls to $350. Answer the same 3 questions I asked in part A.

4. Assume the market price falls to $250. Answer the same 3 questions I asked in part A.

(Question 1 continues on the next page)

5. The table below shows Fine Lines’ supply schedule for Rocking Chairs. Please fill in the table with your answers from A, B, and C above. Fill in the remainder of the table to complete the supply schedule.

6. Suppose the demand curve in the market for rocking chairs is given by the information in the following table. Fill in the market supply for chairs. Remember that there are 1,000 identical firms in this industry. What is the equilibrium price? The equilibrium quantity?

7. In the short run, at the equilibrium market price, are firms in the industry operating with an economic profit or a normal profit or a loss or should the firm shut down? Please explain your answer.

8. In the long run, will the number of firms in the industry change? Please explain.

1-In the short run, when the central bank increases the quantity of money, the

A)demand for money decreases.

B)price level decreases.

C)demand for money increases.

D)nominal interest rate falls.

E)quantity demanded of money decreases

2-If the quantity of money supplied ________ the quantity demanded, in the long run the value of money ________.

a)exceeds; falls as people spend their surplus money

b)exceeds; rises as people buy bonds

c)is less than; falls as people spend their surplus money

d)is less than; does not change unless the Fed increases the money supply

e)equals; equals zero

3-The proposition that in the long run when real GDP equals potential GDP, an increase in the quantity of money leads to an equal percentage increase in the price level is the called the quantity theory of

A)equal change.

B)constant velocity.

C)money.

D)the long run.

E)inflation.

4-All of the following shift the demand for money curve EXCEPT

A)a decrease in real GDP.

B)a rise in the nominal interest rate.

C)an increase in real GDP.

D)an increase in the price level.

E)an improvement in financial technology

1) Business Cycle:  

Analyze the graphic below. What conclusions can you make regarding the business cycle? Which cycle is the United States currently experiencing and what evidence can you give to support your answer?

2) GDP and Circular Flow

What are the four components of GDP?  How is GDP used as a measurement of the economic performance?

In a Mundell-Fleming model with floating exchange rates and perfect capital mobility, discuss effectiveness of monetary and fiscal policy.

The concept of separation of powers, as developed in Articles I, II and III of the U.S. Constitution, includes provision for:

A. three-chamber legislative branch, an executive branch consisting of a head of state and a head of government, and a Committee of the States.

B A two-chamber legislative branch and a committee in charge of the executive branch.

C Four branches of government, a system of checks and balances, and shared authority over the government’s taxation of imports.

D Three branches of government, a different way of selecting the top personnel of each branch, and a system of checks and balances

Based on the Pangle reading, how is the Biblical view of property different than Locke's view? Did Locke’s view completely prevail in America? Support your answer to this second question with examples.

Discuss three ways through which the debt regime rules and restructuring of social economies reversed the development project.

Do you agree with the George W. Bush White House conclusion that a sharp reduction in immigration would be a poorly targeted and inefficient way to assist low-wage Americans? Why or why not?

Students are required to select any firm having characters of Monopoly. Discuss the basic characteristics of monopoly and profit maximization condition. ( support with diagram)

. In 500 words or more, explain the topic. What causes stagflation and give examples of occurrences in our economy. Relate this topic to the Phillip’s Curve and demonstrate why this is a problem to traditional Keynesian thought. What would you recommend to the Fed when stagflation comes calling?

most development economists concur that the level and rate of GDP growth of and per capita income are not sufficient measures of a country's development. What is the essence of their argument

Two firms are competing in an oligopolistic industry. Firm 1, the larger of the two firms are contemplating its capacity strategy, which could be either “aggressive” or “ passive”. Firm 2, the smaller competitor, is also pondering its capacity expansion strategy and a passive strategy. The following table shows the profits associated with each pair of choices:

a. If both decide their strategies simultaneously, what is the Nash equilibrium?

b. If firm 1 could move first and credibly commit to its capacity expansion strategy, what is its optimal strategy? Draw the gram tree and show the equilibrium strategy.

Taco-bell and Rio wrap are competing in the MI market. Each firm is deciding whether to follow a high spending advertising strategy. More aggressive advertising would lead high spending on media and billboard advertising. The profits associated with each strategy are as follows:

a) Does either firm have a dominant strategy? If yes, what is the dominant strategy for each firm?

b) Does either firm have a dominated strategy? If yes, state the strategy for each firm.

c) Find the equilibrium. Is this equilibrium Nash or Dominant strategy or both?

d) Is this game an example of the prisoners’ dilemma? Explain

e) If this game changes to infinitely repetead game, will a cooperation occur? What would be the cooperated strategy? What are their expected payoffs? (assume i=5%)