Economics Answers

1. Anna’s demand for peaches is given by PA = 200 – 3QA, where QA is the quantity (kilograms) demanded at price PA ($/kilo). Basil’s demand is given by PB = 120 – 2QA, where QB is the quantity (kilograms) demanded at price PB ($/kilo). Each of the two has $2,000 that they can spend if they want to buy something.

a. Suppose the endowments are as follows: Anna has 110 kilograms of peaches, Basil has none. When they trade, who will sell to whom? How many kilos will be sold? At what price?

b. Suppose the endowments are as follows: Anna has no peaches, Basil has 110 kilos. When they trade, who will sell to whom? How many kilos will be sold? At what price?

c. Suppose the endowments are as follows: Anna has 60 kilograms of peaches, Basil has 50 kilos. When they trade, who will sell to whom? How many kilos will be sold? At what price?

d. Summarize, in your own words, the answers to parts a) through c).

2. Suppose there are two identical gold bars that you own. The only difference between them is how you acquired them. One bar was won as a prize, the other you purchased.

a. What is the difference in the cost of retaining ownership in the two bars? Explain. (hint: recall the distinction between accounting and opportunity costs).

b. Will there be any predicted difference in the use of the bars? Explain

what is the purpose of dummy variables

With aid of a fully diagram, explain the difference between the govermnent enforcing a minimum price below the equilibrium and the government enforcing a minimum price anove the equilibrium price, ceteris paribus

3. Using the same amount of resources, USA and Canada can each produce oranges and salmonberries as shown in the following table, measured in thousands of bushels.

USA Canada
oranges salmonberries oranges salmonberries
12 0 6 0
3 3 3 3
0 4 0 6


a. Which country has the comparative advantage in producing salmonberries? Which one has the comparative advantage in producing oranges? Explain.

b. Suppose that each country is currently producing 3 thousand bushels of salmonberries and 3 thousand bushels of oranges. Show that both can be better off if they specialize in producing one good and then engage in trade.

2. Suppose there are two identical gold bars that you own. The only difference between them is how you acquired them. One bar was won as a prize, the other you purchased.

a. What is the difference in the cost of retaining ownership in the two bars? Explain. (hint: recall the distinction between accounting and opportunity costs).

b. Will there be any predicted difference in the use of the bars? Explain.

1. Anna’s demand for peaches is given by PA = 200 – 3QA, where QA is the quantity (kilograms) demanded at price PA ($/kilo). Basil’s demand is given by PB = 120 – 2QA, where QB is the quantity (kilograms) demanded at price PB ($/kilo). Each of the two has $2,000 that they can spend if they want to buy something.

a. Suppose the endowments are as follows: Anna has 110 kilograms of peaches, Basil has none. When they trade, who will sell to whom? How many kilos will be sold? At what price?

b. Suppose the endowments are as follows: Anna has no peaches, Basil has 110 kilos. When they trade, who will sell to whom? How many kilos will be sold? At what price?

c. Suppose the endowments are as follows: Anna has 60 kilograms of peaches, Basil has 50 kilos. When they trade, who will sell to whom? How many kilos will be sold? At what price?

d. Summarize, in your own words, the answers to parts a) through

what would happen in the market for ricoffee if the price of frisco coffee increases with a full labelled diagram

Using the money multiplier 16.66, how much will the money supply change if checkable deposits increase by $300 million?

Suppose it is shown that the long run average cost curve of a firm is like a flat bottom-U. Advance economic arguments to explain this shape