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Busi 1083: MICROECONOMICS
Assessments
Table of Contents
Assignment #1 Questions 2
Assignment #2 Questions 4
Assignment #3 Questions 7
Assignment #4 Questions 9
Assignment #1 Questions
Due no later than 11:00 p.m. on Sunday of Unit 2
Weight 2.5% of the final grade
Late Submission Policy
This assignment is subject to the Late Submission penalty policy, namely 5% per day for three days.
This page will close and will not allow further submissions after this Late Submission period has expired.
In the event of an emergency situation preventing you from submitting within this time frame, special permission must be obtained from your instructor. A documentation substantiating emergency is required. In such a circumstance, if the extension is granted, the professor will reopen the submission function for you on an individual basis.
Please do not email your submissions to your professor, either before or after the due date; all coursework should be submitted through the online course (Moodle).
Description
Students are to complete assignments in Word (or some other compatible word processor) that apply economic concepts learned in this course and submit for evaluation.
Diagram 1 Diagram 2
1. Diagram 1 above depicts the production possibility frontier (PPF) for a Patsy’s Snack Shop.
Answer the questions below and show all calculations where appropriate.
1. Using the information provided, and by refe
ing to points or values on the diagram, explain in one paragraph how Diagram 1 illustrates the problem of scarcity for Patsy’s Snack shop.
1. Using the information provided in Diagram 1, and by refe
ing to points or values on the diagram, explain how this PPF illustrates production efficiency for Patsy’s Snack Shop.
1. “Every point on this PPF in Diagram 1 involves a tradeoff.” Explain by refe
ing to specific values and points on the diagram.
1. In Diagram 1, compare the opportunity cost of increasing the production of cakes from 8 to 12 with the opportunity cost of increasing the production of cakes from 14 to 16 cakes. Show your calculations. Why is the opportunity cost of making an extra cake not the same in the two situations?
1. In Diagram 2, how would explain the change in the shape of Patsy’s Snack Shop from PPF1 to PPF2?
. (35 points)
Possible Output Combinations
Apples
(thousands of kilos)
Pears
(thousands of kilos)
A
70
0
B
60
20
C
50
36
D
40
48
E
30
56
F
20
60
G
10
63
H
0
65
2. Refer to The Fruit Farm produces only apples and pears. The table above shows the maximum possible output combinations of the two fruits using all resources and cu
ently available technology. (35 points)
a. Graph the Fruit Farm's production possibilities frontier. Put apples on the horizontal axis and pears on the vertical axis. Be sure to identify the output combination points on your diagram.
. Suppose the Fruit Farm is cu
ently producing at point D. What is the opportunity cost of producing an additional 8,000 kilos of pears?
c. Suppose the Fruit Farm is cu
ently producing at point D. What happens to the opportunity cost of producing more and more pears? Does it increase, decrease or remain constant? Explain your answer.
d. Suppose the Fruit Farm is cu
ently producing at point G. What happens to the opportunity cost of producing more and more apples? Does it increase, decrease or remain constant? Explain your answer.
e. Suppose the Fruit Farm is plagued by a maggot infestation which destroys apple trees but not pears. Show in a graph what happens to its PPF.
3. The following table shows the amount of good A and good B that two countries could produce if they devoted all of their resources to that good. Assume both countries have the same amount of resources and the trade-off between good A and good B remains constant as resources are shifted from one good to another. (30 points)
Canada
India
Good A
200
300
Good B
400
900
a. Which country has the absolute advantage in good A? In good B?
. What is Canada’s marginal opportunity cost of producing good A? good B?
c. What is India’s marginal opportunity cost of producing good A? good B?
d. Which country has the comparative advantage in good A? In good B?
Assignment #2 Questions
Due no later than 11:00 p.m. on Sunday of Unit 4
Weight 2.5% of the final grade
Late Submission Policy
This assignment is subject to the Late Submission penalty policy, namely 5% per day for three days.
This page will close and will not allow further submissions after this Late Submission period has expired.
In the event of an emergency situation preventing you from submitting within this time frame, special permission must be obtained from your instructor. A documentation substantiating emergency is required. In such a circumstance, if the extension is granted, the professor will reopen the submission function for you on an individual basis.
Please do not email your submissions to your professor, either before or after the due date; all coursework should be submitted through the online course (Moodle).
Description
Students are to complete assignments in Word (or some other compatible word processor) that apply economic concepts learned in this course and submit for evaluation.
1. John was discussing the market for cocoa beans with his friend Kim. John said, "Ever since Venezuela announced that its cocoa harvest was its lowest ever in fifteen years, the price of cocoa beans has been rising and rising and people are buying more and more. I think the demand for cocoa beans must be upward sloping." Is John right? Briefly explain why or why not. (10 points)
2:
Diagram 1
Assume Diagram 1 above represents a competitive market. What is the market situation at a price of $6 with respect to supply and demand quantities? What changes in supply and/or demand can cause the equili
ium market price to fall to $2 (list all possibilities)?
3. According to the Australian Wool Innovation, severe drought conditions in Australia contributed to the lowest level of wool production in 50 years. This record low production has driven up prices sharply in Australian wool markets. Meanwhile, the price of raw cotton increased significantly for the first time in many years. (30 points)
a. Illustrate this observation with one demand and supply graph for the market for Australian wool and another demand and supply graph for raw cotton.
. Make sure that your graphs clearly show (1) the initial equili
ium before the decrease in the supply of Australian wool and (2) the final equili
ium.
c. Use a
ows to indicate any shifts in the demand and supply curves for each market.
d. Label your graphs fully and write an explanation of your work.
4: The owner of Christie’ Bookstore is looking into the sales of its Health & Fitness magazine section. She finds that her equili
ium is at 1000 magazines per month sold at an average price of $4.25 per magazine. When the average price of these Health & Fitness magazines rose to $4.95 each, the quantity demanded fell to 900 magazines per month, while the quantity supplied to her increased to 1250 a month.
a. Draw an appropriate graph for Christie’s original Health & Fitness magazine market position.
. Calculate the price elasticity of demand for the Health & Fitness magazines between prices $4.25 and $4.95. Is it elastic or inelastic? How do you know?
c. Calculate the price elasticity of supply for the Health & Fitness magazines between prices $4.25 and $4.95. Is it elastic or inelastic? How do you know based on your answer?
d. Describe three realistic factors could affect the elasticity of demand for Health & Fitness magazines.
e. Christie also notices that when the average price of the Health & Fitness magazines rose from $4.25 to $4.95, the quantity of nutritious snack bars sold at the checkout register fell by 12%. Calculate the cross elasticity of demand between the two goods. Based on your answer, are they substitutes or complements?
Assignment #3 Questions
Due no later than 11:00 p.m. on Sunday of Unit 6
Weight 2.5% of the final grade
Late Submission Policy
This assignment is subject to the Late Submission penalty policy, namely 5% per day for three days.
This page will close and will not allow further submissions after this Late Submission period has expired.
In the event of an emergency situation preventing you from submitting within this time frame, special permission must be obtained from your instructor. A documentation substantiating emergency is required. In such a circumstance, if the extension is granted, the professor will reopen the submission function for you on an individual basis.
Please do not email your submissions to your professor, either before or after the due date; all coursework should be submitted through the online course (Moodle).
Description
Students are to complete assignments in Word (or some other compatible word processor) that apply economic concepts learned in this course and submit for evaluation.
1. Amy owns a fish shop. She employs workers to sort and pack the fish. Workers can pack the following amounts of fish in an hour: (15 points)
Number of students: 1 2 3 4 5 6 7 8
Quantity of fish (kilograms): 20 50 90 120 140 150 150 140
a. Use the data to calculate the MP of workers.
. If all fish shops in Amy's area pay their packers $5 an hour, how many workers will Amy employ? Assuming Amy sells her fish for $0.50 a kilogram.
2. The table below shows a car manufacturer’s total cost of producing cars. (35 points)
Q
TC
TVC
AVC
AFC
ATC
MC
0
$500,000
1
540,000
2
560,000
3
570,000
4
590,000
5
620,000
6
660,000
7
720,000
8
800,000
9
920,000
10
1,100,000
c. What is this manufacturer’s fixed cost?
d. For each level of output, calculate the total variable cost [TVC]. For each level of output
except zero output, calculate the average variable cost [AVC], the average total cost [ATC],
and the average fixed cost [AFC]. What is the minimum average cost output?
e. For each level of output, calculate this manufacturer’s marginal cost [MC].
f. In one diagram, draw the manufacturer’s AVC, ATC, and MC curves.
Diagram 1
3. Diagram 1 shows alternative indifference curves (IC1 and IC2) and budget constraint lines (BC1, BC2, BC3) for Jennifer who enjoys consuming tacos with soda. Based on the Budget Constraint BC1, if the consumer’s income is