1. Based on the following information for the state of Montana,
a. Draw the Production Possibilities Curve.
b. Determine the opportunity costs for a move from A to B; B to C; and C to D.
CHOICE |
OIL / barrels |
WHEAT / bushels |
A |
15000 |
0 |
B |
12000 |
10000 |
C |
7500 |
20000 |
D |
0 |
25000 |
a.)
b.) A to B: _____________ B to C: __________________ C to D: _________________
2. State whether the following issues are macroeconomic or microeconomic in nature.
a. A small country has decided to place tariffs on all products entering the country.
____________________
b. A musical company on Broadway is trying to decide if they should continue to put on a show.
____________________
c. The GDP growth of Brazil has fallen to an all time low.
____________________
d. The city of Pittsburgh would like to increase property taxes.
____________________
e. A plumber is thinking about expanding his business despite his rising costs.
____________________
3. Based on the information provided for the market for Keurig coffee makers, answer the following questions.
PRICE |
Q DEMANDED |
Q SUPPLIED |
$300 |
60 |
150 |
$250 |
70 |
130 |
$200 |
80 |
110 |
$150 |
90 |
90 |
$100 |
100 |
70 |
a.)
b.) PRICE: ______________________ QUANTITY: ______________________
Now, assume that a new government report claims that drinking hot beverages may cause cancer.
c.)
d.) P: _______________________ Q: _______________________
4. Assume you are a policymaker in Washington DC. Lobbyists for the dairy farmers of America have put pressure on their representatives to put a price control on milk. You have been assigned a position on a new committee to study the impact of such a control.
Your job is to:
5. Calculate the elasticity of demand for the following products. Note whether the demand is elastic or inelastic.
Change in price |
Change in quantity |
|
A new Cadillac |
5% drop |
10% increase |
Grapes |
12% rise |
20% fall |
Gasoline |
6% falls |
4% increase |
Municipal water |
15% increase |
12% decrease |
Toll on turnpike |
10% rise |
14% fall |
Product Elasticity Elastic or Inelastic
Cadillac _________________ ___________________
Grapes _________________ ___________________
Gasoline _________________ ___________________
Municipal water _________________ ___________________
Turnpike toll _________________ ___________________
1. Based on the following information for the state of Montana, a. Draw the Production Possibilities...
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