Microeconomics Answers

Draw a production possibilities curve for a hypothetical economy producing capital goods and consumer goods. Suppose a major technological breakthrough occurs in the capital goods industry and the new technology is widely adopted only in this industry. Draw the new production possibilities curve. Now assume that a technological advance occurs in consumer goods production, but not in capital goods production. Draw the new production possibilities curve.
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Suppose, unfortunately, your mathematics and economics professors have decided to give tests two days from now and you can spend a total of only 12 hours studying for both exams. After some thought, you conclude that dividing your study time equally between each subject will give you an expected grade of C in each coarse. For each additional three hours of study time for one of the subjects, your grade will increase one letter for that subject, and your grade will fall one letter for the other subject.

A) Construct a table for the production possibilities and corresponding number of hours of study in this case.

B) Plot these production possibilities data in a graph.

C) Does this production possibilites curve reflect the law of increasing opportunity costs?Explain

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Which of the following decisions has the greater opportunity cost? Why?
a. A decision to use an undeveloped lot in Tokyo's financial district for an apartment building.
b. A decision to use a square mile in the desert for a gas station.
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Draw a graph without specific data for the expected relationship between the following variables:
a. The probability of living and age.
b. Annual income and years of education.
c. Inches of snow and sales of bathing suits.
d. The number of football games won and the athletic budget. In each case, state whether the expected relationship is direct or inverse. Explain an additional factor that would be included in the ceteris paribus assumption because it might change and influence your theory.
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Assume a research firm collects survey sales data that reveal the relationship between the possible selling prices of hamburgers and the quantity of hamburgers consumers would purchase per year at alternative prices. The report states that if the price of a hamburger is $4, 20,000 will be bought. However, at a price of $3, 40,000 hamburgers will be bought. At $2, 60,000 hamburgers will be bought, and at $1, 80,000 hamburgers will be purchased.
Based on these data, describe the relevant relationship between the price of a hamburger and the quantity consumers are willing to purchase, using a verbal statement, a numerical table, and a graph. Which model do you prefer and why?
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Pareto approach for analyzing the welfare economics

One of the more important measures in regard to international economics is the balance of payments. Think of it as a national accounting measure that looks at the flow of goods and services into and out of an economy in a given period of time. It also shows capital flows into and out of a country. Until 1980, the United States tended to run a positive-to-neutral balance of payments position and was a creditor nation. In the course of the past 30 years, the United States has moved to a negative balance of payments and to being a debtor nation.

Review and discuss the following:

Discuss the importance of the balance of payments as an accounting measure.
Discuss the current account and its components and the capital and financial accounts and their components.
How important is the U.S. deficit in traded goods in regard to the balance of payments?

Using the circular flow diagram in the notes and the following values find National Savings.

C = 475

I = 75

G = 60

T = 84

NX = 20

Scarcity and competition are more often than not linked together. When there's a limited number of slots and a large number of applicants, firms will use __________ to determine who gets what.

Suppose at a price of $50, Yoshi’s Jazz Bar sells 20 tickets to its nightly jazz performance and at a price
of $40, it sells 25 tickets. Based on this information, answer the following using the ARC method:
A) What is the price elasticity of demand for tickets to Yoshi’s Jazz Bar?
B) What is the degree of elasticity for the tickets?
C) What would happen to sales if Yoshi’s Jazz Bar lowered its ticket price by 2% to its sales (numeric
answer)?
D) What happens to the total revenue when they drop their price from $50 to $40?