Question

OPPORTUNITY COST & MARGINAL ANALYSIS the follo b. U.S. sonm ent c. 3. Indicate whether each of the following statements applies to microeconomics or macroeconomics: The unemployment rate in the United States was 4.1 percent in January 2018. A U.S. software firm discharged 15 workers last month and transferred the work to India. An unexpected freeze in central Florida reduced the citrus crop and caused the price of oranges to rise. U.S. output, adjusted for inflation, decreased by 2.4 percent in 2009. Last week Wells Fargo Bank lowered its interest rate on business loans by one-half of 1 percentage point. The consumer price index rose by 3.8 percent from August 2011 to August 2012 Suppose that you initially have $100 to spend on books or movie tickets. The books start off costing $25 each and the movie tickets start off costing $10 each. For each of the following situations, would the attainable set of combinations that you can afford increase or decrease? Your budget increases from $100 to $150 while the prices stay the same. Your budget remains $100, the price of books remains $25, but the price of movie tickets rises to $20. Your budget remains $100, the price of movie tickets remains $10, but the price of a book falls to $15. Multiple Choice Question: Suppose that you are given a $100 budget at work that can be spent only on two items: staplers and pens. If staplers cost $10 each and pens cost $2.50 each, then the opportunity cost of purchasing one stapler is: a. 10 pens. b. 5 pens. c. zero pens. d. 4 pens. For each of the following situations involving marginal cost (MC) and marginal benefit (MB), indicate whether it would be best to produce more, fewer, or the current number of units. 3.000 units at which MC =$10 and MB = $13. b. 11 units at which MC = $4 and MB-$3. 43,277 units at which MC =$99 and MB $99. d. 82 units at which MC <MB. 5 units at which MB<MC. Explain how (if at all) each of the following events affects the location of a country's production possibilities curve: The quality of education increases. The number of unemployed workers increases. A new technique improves the efficiency of extracting copper from ore. A devastating earthquake destroys numerous production facilities Suppose you won $15 on a lotto ticket at the local 7-Eleven and decided to spend all the winnings on candy bars and bags of peanuts. Candy bars cost $0.75 each while bags of peanuts cost $1.50 each. Construct a table showing the alternative combinations of the two products that are available Plot the data in your table as a budget line in a graph. What is the slope of the budget line? What is the opportunity cost of one more candy bar? Of one more bag of peanuts? Do these opportunity 5. a. c. costs rise, fall, or remain constant as additional units are purchased? Does the budget line tell you which of the available combinations of candy bars and bags of peanuts to buy? Suppose that you had won $30 on your ticket, not $15. Show the $30 budget line in your diagram. Has the number of available combinations increased or decreased? d.

Answer 1

1. a. Statement a is macroeconomic as it speaks of the unemployment rate in US.

b. The second statement i.e. b is microeconomic as it speaks of a set of labour force.

c. The third statement is macroeconomic as it deals with price of articles concerning the economy as a whole.

d. It is a macrieconomic statement as inflation causes the general price level to rise.

e. It is microeconomic as it deals with few individuals affecting a few individuals.

f. It is a macroeconomic statement as it deals with consumer price index which is used to calculate inflation.

2. a. My affordability will increase as my budget increases to $150 while the price remains same.

b. Since the budget is same but the ticket price has increased therefore i can afford less of the movie tickets at the same budget.

c. In this statement definitely i can afford more books and movie tickets as my budget is same the price of movie tickets are same but the price of books has fallen.

3. d. 4 pens is the correct answer.

As the price of pen is $2.50 and price of stapler is $10, therefore we can leave out 4 pens ( 2.50*4=10) for a single stapler.

4. a. More no of units as the MC is less than MB. Therefore the profit earned will be higher.

b. Lesser units should be produced as MC is greater than MB.

c. Current no of units to be produced as MC = MB.

d. More no of units can be produced because MB is greater than MC.

e. Lesser units as MC is greater than MB.