MICROECONOMICS - Chapters 1-4,6,7
NAME: ______________________
DATE: ______________________
Answer the following questions. For any problems show your work.
1) You have an opportunity to work 2 hours overtime and earn 1.5 times your usual rate of $18 per hour. However, a total of $17 will be taken out for taxes. You parked in the parking garage and will have to pay $5 to park for the additional two hours. You also didn't pack an extra meal, which you already have in the refrigerator at home. You will have to spend $10 for food. According to the marginal principle and everything else equal; will you work the overtime? (Show your work)
2) You go into a store with $1,000. You have na
owed down your top to options. You want to buy a cell phone for $400, a tablet for $250 and clothes for $300 OR a big screen 4K LED TV for $1,000. You end up buying the 4K LED TV for $1,000. The store also sells computers, food, and video games. In this example explain what is your opportunity cost?
3) Explain in detail a market. Explain in detail economic system.
4) Use the following graph to answer the question.
A) Identify the equili
ium price and quantity: Price $__________ XXXXXXXXXXQuantity _________
B) Identify at a price of $2.00 if there is a shortage or surplus and give the amount: _________
C) Identify at a price of $1.00 if there is a shortage or surplus and give the amount: _________
5) Complete the following table. Include the amount of the surplus or shortage
Thousands
of iphones
demanded
Price
pe
iphone
Thousands
of iphones
supplied
Surplus (+)
o
shortage (-)
115
102
95
88
76
$75
125
199
223
279
89
97
103
114
122
_________
_________
_________
_________
_________
6) Use the following equation to answer the problem and identify if the answer represents either elastic, inelastic, or unit elastic
Percentage Change in Quantity
Ed = Demanded of Product X
XXXXXXXXXX_____________________
Percentage Change in Price
of Product X
A) The price of watches increases 5% and quantity demanded decreases by 6%.
Ed=
B) The price of pizza decreases by 11% and quantity demanded increased by 9%.
Ed=
C) The price of cell phones decreases by 4% and quantity demanded increases by 4%.
Ed=