MACROECONOMICSMID-TERM EXAMUse the graph to answer questions XXXXXXXXXX %)1) What is the opportunity...

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MACROECONOMICSMID-TERM EXAMUse the graph to answer questions XXXXXXXXXX %)1) What is the opportunity cost of increasing production of tractors from 2 to 3? 2) Identify one combination of production that is on the production possibilities curve.3) List any combination of production that is not cuently possible based on the production possibilities curve.4) You have an opportunity to work three hours of overtime and earn an extra $99 gross income.  However, a total of $32 will be taken out for federal, state, and local taxes.  You parked in the parking garage and will have to pay $6.50 total to park for the additional hours.  You also didn't pack an extra meal, which you already have in the refrigerator at home; so you will have to spend $12 for food.  You will also have to pay $55 for additional daycare for your children.   According to the marginal principle and everything else equal (ceteris paribus); will you work the overtime? Why or why not? (Show your work) (10 %)Use the following table to answer question 5    # of Workers    Total # of Pizzas(Output)    MarginalProduct    1    15    15    2    33    18    3    55    22    4    66    115) Identify when diminishing returns take place based on marginal product.  Identify the number of workers when that takes place. (5 %)6) What is an economic system?  Compare/contrast three main differences between the two main categories of economic systems. (10 %)7) List each of the three main categories of forms of business ownership.  Then include the number of owners, how they are taxed, and explain the liability for each of the three categories of business ownership. (15 %)8)  Use the following graph to answer the following:         Equiliium Price       __________    Equiliium Quantity __________        At each price listed, indicate a surplus or shortage and the amount:    $8______________ ,  $4______________, $2_______________ XXXXXXXXXX %) 9) Explain the law of demand, the law of supply, and market equiliium. (15 %)Answer question 10 using the following graph.10) Explain when we would identify supply by moving along the curve, using "Y" and X" and then explain when we would shift from S1 to S2 to identify supply. (10 %)

Ayushi · Accepted Answer

1
Macro Economics Exam
Contents
Answer 1:	3
Answer 2:	3
Answer 3:	3
Answer 4:	3
Answer 5:	3
Answer 6:	3
Answer 7:	5
Answer 8:	6
Answer 9:	6
Answer 10:	7
References	7
Answer 1:
Opportunity cost of increasing production of tractors from 2 to 3: 
For increasing the production of tractors from 2 to 3, the production of bread needs to be reduced from 14 to 8. Therefore, the opportunity cost would be 6 units of bread.
Answer 2:
One combination of production that is on the production possibilities curve:
Point C: (tractor, Bread): (2, 14)
Answer 3:
Combination of production that is not currently possible based on the production possibilities curve:
(Tractor, Bread): (3, 12)
Answer 4:
Marginal income = (99- 32)/ 3 = 22.33, the opportunity should be accepted as it is giving a gain not any loss if all other factors are kept constant.
Answer 5:
Diminishing returns takes place at marginal product of 11 on the basis of marginal product. Diminishing returns takes place when an addition of 4th worker is done to the production activity. So the level of workers at which diminishing returns takes place are 4.
Answer 6:
Economic system:
Economic system can be defined as a manner in which various available resources, goods and services are distributed by the government of the country among its population according to the needs of a particular region or society. Various factors of production such as entrepreneurs, capital, physical resources, labor and information related resources are regulated by the economic system followed in the country. 
Two main types of economic systems are:

MACROECONOMICS MID-TERM EXAM Use the graph to answer questions XXXXXXXXXX %) 1) What is the opportunity cost of increasing production of tractors from 2 to 3? 2) Identify one combination of production...

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