Part I: Using a well labeled graph and words that explain your graph, show the short run average variable cost curve and the marginal cost curve. Explain the shapes of the two cost curves. Where do the two cost curves intersect? Why?

How does health affect income and income affect health of the workers? What is the multiplier effect? Explain by using graphical expositions and examples.

What problems does the Bureau of Labor & Statistics face in measuring unemployment? Discuss the three problems that make the consumer price index an imperfect measure of the cost of living.

Instructions: Work on the following questions/problems. Be sure to answer all questions (and sub questions within a problem).

• USE this as you answer sheet (adjust spacing as necessary). Show solutions.
• This worksheet can be handwritten BUT be sure it is legible
• Upload work to the designated link in Canvas

1. (15 points) Suppose John, the owner-manager of a local hotel projects the following demand for his rooms:

                        Price ($)          Qty. Demanded

                        90                    100

                        110                  90

                        130                  70

1. Calculate the price elasticity of demand between $90 and $110 using the midpoint formula
2. Is the price elasticity of demand elastic, inelastic, or unit elastic at this price range (re: a)? Interpret the actual number you calculated.
3. Is it a good idea for John to raise his price from $90 to $110? Explain in 2 sentences.
4. Calculate John’s total revenue when price is $110 vs. when price is $130.
5. Based on your answers in (d), is demand elastic, unit elastic or inelastic at that price range (re: d)?

2. Consider the two products – laundry soap and Tide washer soap. Which product will have the more inelastic demand? Explain in 2-3 sentences. (5 points)

3. TRUE or FALSE. Suppose the market for crude oil experiences a decrease in demand. Assuming a relatively inelastic supply for crude oil, this market shock leads to a relatively smaller decrease in equilibrium price. Include a graph to illustrate and explain in 2-3 sentences (5 points).

Beginning in 2018, The U.S. imposed high tariffs on goods imported from several countries. Answer this questions about the tariffs:

1. On what goods from what countries and at what rates have tariffs been imposed, and what are the values of the goods on which the tariffs have been imposed?

You have been analyzing the cereal market for some time now. Your boss is the chief operating officer of Cheeros, a cereal selling in the same market as General Mills, and many other brands. You have made the following notes that you are about to present to him in your next meeting:

--change in quantity demanded for the total cereal industry last month = -3 percent

--change in the average price of cereals for the industry last month = +2 percent

--change in quantity demanded for Cheeros last month = -5 percent

--change in price per unit of Cheeros cereal last month = +2 percent.

What can you conclude about consumer sensitivity to Cheeros in relation to the rest of the cereal market? Why do you think this is the case?

Discuss three other social problems associated with the use of Facebook, and recommend a solution for each problem.

A monopolist faces a market demand curve given by P(y)=100-y. Its cost function is C(y)=y2+20.

a) Find its profit-maximizing output level and market price.

b) Calculate its total revenue, total cost and profit at that output.

c) Calculate CS, PS and DWL? d) What is the efficient amount of output?

e) Plot the graph for this monopolist indicating P(y), MR, MC, y*, p(y*), CS, PS, and DWL.

Tom has a weekly allowance of $24, all of which he spends on pizza and movie rentals. Pizza is $6 a slice and rentals are $3 each.

1. Make a table for slices 0 to 8, which have the following total utility………..0, 20, 36, 48, 58, 66, 72, 76, 78.

Include in the table the movie rentals from 0-8 which have the following total utility…..0, 40, 46, 50, 54, 56, 57, 57, 57

HINT- It is marginal utility that will decide this; include that on the table as well. Oh, no, it is actually marginal utility per dollar that you need. Include that as well in your table and now you are ready to solve. Explain your process.

          PIZZA                                                   MOVIES

Q     T.U.     M.U .   MU/P                          Q   T.U.   M.U.   M.U./P

0      0                                                             0     0

1     20                                                            1    40

2     36                                                            2    46

3     48                                                            3    50

4     58                                                            4    54

5     66                                                            5    56

6     72                                                            6    57

7     76                                                            7    57

8     78                                                            8    57

2. How many movie rentals and pizza slices should Tom consume each week? Show work and explain.
3. What is Tom’s total utility from consuming the pizza and movies? Show.

Please answer at least in 300 words. Please do NOT copy and paste from another source.

Discuss the differences between the traditional HDI in comparison to the “new” (NHDI) formulation. In what ways do you think either one is a better measure of human development?

Suppose a consumer has preferences represented by the utility function U(X,Y) = MIN[X,2Y]. Suppose PX = 1 and PY = 2. Draw the Income Consumption Curve for this consumer for income values M = 100, M = 200, and M = 300. Your graph should accurately draw the budget constraints for each income level and specifically label the bundles that the consumer chooses for each income level. Also, for each bundle that the consumer chooses, draw the indifference curve that goes through that bundle.

Cellulon, a manufacturer of home insulation, wants to develop guidelines for builders and consumers on how the thickness of the insulation in the attic of a home and the outdoor temperature affect natural gas consumption. In the laboratory, it varied the insulation thickness and temperature. A few of the findings are:

On the basis of the sample results, the regression equation is:

yˆ y⁢^⁢  = 146.26 − 2.82x₁ − 2.06x₂

1. How much natural gas can homeowners expect to use per month if they install 6 inches of insulation and the outdoor temperature is 48 degrees F? (Round your answer to 2 decimal places.)

2. What effect would installing 7 inches of insulation instead of 6 have on the monthly natural gas consumption (assuming the outdoor temperature remains at 48 degrees F)? (Round your answers to 2 decimal places.)

3. The regression coefficients b₁ and b₂ are negative? Is this logical?

1. Which of the following contributed to the severity of the Great Depression of the 1930s?

a. large increases in tax rates in 1932 and again in 1936

b. large increases in the money supply during the early 1930s

c. a reduction in tariffs protecting many U.S. industries

d .a substantial tax rate reduction, which led to large deficits and high interest rates during the early 1930s

2. When a firm or an enterprise obtains more funds from government and less from consumers, the enterprise will

a. be less likely to provide political candidates with campaign contributions than firms that do not benefit from government funding.

b. spend more time trying to influence politicians and less time trying to meet the preferences of consumers.

c. have more incentive to control costs because of the government funding.

d. be driven more by market forces than by politics.

3. Once the criterion for receipt of an income transfer is established,

a. only those people whom the transfer is intended to help will qualify for the transfer.

b. the net gain derived by the transfer recipients will exceed the spending on transfer program.

c. the incentive to modify behavior in order to qualify for the transfer decreases.

d. people will modify their behavior in order to qualify for the transfer, decreasing their net gain from the transfer.

4.  Which person is more likely to have more wealth upon retirement?

a person who has invested 5 percent of their income into an equity mutual fund beginning at age 22

a professional who bought some of their company's stock beginning at age 30

a person who has invested 5 percent of their income into a stock portfolio beginning at age 50

a person who has invested 5 percent of their income into government bonds beginning at age 22

Explain the difference between "user value" and "existence value." Define both and explain the importance of each when measuring the benefits of environmental goods.