Download Econ. - Final Exam Extra Credit

ECONOMICS
FINAL EXAM EXTRA CREDIT
Directions: The following questions are meant to supplement your Final Exam Review that we will be
doing in class. Draw and explain all graphs when necessary. This assignment is due the second day of the
final exam and is worth 20 extra credit points. Calculations can be inserted into the tables on this sheet, but
all graphs and other answers must be done on separate sheets of paper.
CHAPTER 1-3:
1.
Explain the concept of opportunity cost. How does the Production Possibilities curve illustrate
this concept?
2.
Draw a Production Possibilities curve for the following two products. Put Grapes on the vertical
axis and Can Openers on the horizontal axis.
Grapes (millions of
tons)
0
1
2
3
4
5
6
Can Openers
(millions)
21
20
18
15
11
6
0
(a) What is the opportunity cost in can openers for producing 1 additional ton of grapes?
(b) What would be said about this economy if it only produced 3 million tons of grapes
and 8 million can openers?
(c) What would happen to the Production Possibilities curve if this economy could
produce 3 million more can openers and 1 million more tons of grapes at each level?
What would that be called and what could cause it?
CHAPTER 4-6:
1.
Draw a supply and demand curve that has the following price/quantity combinations:
Market for sunglasses
Price
Quantity Demanded
Quantity Supplied
$5
600
200
$10
500
300
$15
400
400
$20
300
500
$25
200
600
(a) What is the equilibrium price and quantity for sunglasses in this market?
(b) Suppose that consumer’s taste for sunglasses rises so that they are willing to buy 200
more pair at each price level. Draw a new supply and demand graph to illustrate the
new equilibrium price and quantity for sunglasses.
(c) Suppose that the cost of iridium, a resource used in the production of sunglasses,
decreases so that producers are willing to produce 400 more pair at each price level.
Using the demand curve from (b), Draw a new supply and demand graph to illustrate
the new equilibrium price and quantity.
CHAPTER 7-9:
1. Consider the following table:
Output (Q)
Total Cost
Marginal Cost
Total Revenue
0
1
2
3
4
5
$0
$1,200
$2,100
$2,700
$3,000
$3,000
$0
$900
$1,600
$2,100
$2,400
$3,000
------------
Marginal
Revenue
Profit
(a) Fill in the values in the table for marginal cost, marginal revenue, and profit. At what level of
output would profit maximization occur?
CHAPTERS 10, 12, 13:
1. Consider the following table:
Category
2010 (in billions)
Consumption
$500
Investment
$200
Intermediate goods
$300
Government purchases
$125
Financial transactions
$45
Net Exports
$5
2011 (in billions)
$510
$225
$350
$135
$55
$ 15
(a) What is the Nominal GDP for 2010 and 2011?
2. Consider the following table:
Goods
Quantity
Price in
Purchased
purchased in 2010
2010
Televisions
10
$800
Computers
5
$400
Shoes
10
$70
Oranges
20
$1
Volleyballs
5
$30
Total in
2010
Quantity
purchased in
2011
12
6
14
22
5
Price in
2011
Total in
2011
$850
$425
$73
$2
$31
(a) Assume that all the products in the table are final goods and that they were produced within
the borders of this country in 2009 and 2010. Calculate the value of Nominal GDP for 2010
and 2011.
(b) Calculate the value of Real GDP for 2011, using 2010 as the base year.
(c) Assume that the population is 50. What would be that Real GDP per capita for this country
in 2011 (round your answer to the nearest whole number)?
CHAPTER 14, 15, 16:
1.
Consider the following data for the U.S. economy? The target unemployment rate for the U.S.
economy is 5%.
Year
2007
2008
2009
GDP
+3.3%
+1.5%
- 0.5%
Inflation (CPI)
+3.2%
+2.8%
+1.2%
Unemployment rate
5.8%
6.1%
7.2%
(a) Where in the business cycle would this economy be in 2011?
(b) What type of fiscal policy should the U.S. government use to reduce the unemployment rate?
What effect would these policies have on the budget and the National debt?
(c) What type of monetary policy would the U.S. economy have to use to reduce unemployment?
What effect would this have on the money supply and market interest rates?
(d) What effect would both of these fiscal and monetary policies have on aggregate demand,
prices, the unemployment rate, and GDP?
CHAPTER 17
1.
Consider that the United States and Greece can produce two products, avocadoes and olives.
Given the table below, answer the following:
A. Which country has an absolute advantage in producing which good?
B. Which country has a comparative advantage in producing which item?
Amount produced in one month
Bushels of Avocadoes
United States
Greece
15
6
2.
3.
Bushels of
Olives
20
9
If a dinner in Japan costs 15,000 yen, and the exchange rate is 110 yen to the dollar, what is the
dollar price of the meal?
If the value of the pound changes from .65 dollars to .80 dollars, does the pound appreciate or
depreciate against the dollar? Explain how you arrived at your answer.