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DEVRY ECON 545 Entire Course
DEVRY ECON 545 Week 1 DQ 1 Supply and Demand
DEVRY ECON 545 Week 1 DQ 2 Elasticity and the Minimum Wage
DEVRY ECON 545 Week 2 DQ 1 Marginal Analysis
DEVRY ECON 545 Week 2 DQ 2 Controlling Costs
DEVRY ECON 545 Week 2 Project Part 1
DEVRY ECON 545 Week 3 DQ 1 Mergers Acquisitions
DEVRY ECON 545 Week 3 DQ 2 Anti-Trust Policy and Microsoft
DEVRY ECON 545 Week 3 Quiz Imperfect Competition
DEVRY ECON 545 Week 4 DQ 1 Macroeconomic News
DEVRY ECON 545 Week 4 DQ 2 Healthcare
DEVRY ECON 545 Week 5 DQ 1 Trade Deficits
DEVRY ECON 545 Week 5 DQ 2 Exchange Rates
DEVRY ECON 545 Week 5 Project Part 2
DEVRY ECON 545 Week 6 DQ 1 Fiscal Policy
DEVRY ECON 545 Week 6 DQ 2 Monetary Policy
DEVRY ECON 545 Week 6 Monetary and Fiscal Policy – You Decide
DEVRY ECON 545 Week 6 Quiz
DEVRY ECON 545 Week 7 DQ 1 The Public Sector
DEVRY ECON 545 Week 7 DQ 2 Forecasting
DEVRY ECON 545 Week 8 Final Exam
ECON 545 Week 1 DQ 1 Supply and Demand
ECON 545 Week 1 DQ 2 Elasticity and the Minimum Wage
ECON 545 Week 2 DQ 2 Controlling Costs
ECON 545 Week 2 Project Part 1
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Exercise 1 Answer: Supply demand factors which basically govern
consumer and producers responses to fluctuating prices of gasoline are:The price of gasoline reflects the producer’s costs and consumers’
willingness to pay. Gasoline prices rise if it costs more to produce and
supply or if people wish to buy more gasoline at the current price that is
when demand is higher than supply due to price of gasoline and vice-versa.
This happens till gasoline prices reach the price at which the consumer
demand matches the quantity produced. Market prices reflect individual
decisions about prices at which to sell or buy. Market prices are a
mechanism that equalizes the quantity demanded and the quantity supplied.
Rising prices signal consumers to produce less and producers to supply
more.
Limited substitutes for gasoline restrict the options available to consumers to
respond to price increase. Gasoline show more inelastic behavior in price
demand of elasticity. Consumer doesn’t substantially reduce its demand for
gasoline in response to either short-run or long-run price increase. The
relative inflexibility of consumer demand for gasoline makes consumers
more vulnerable to substantial gasoline price increases. This inability to
substitute other products for gasoline in the short-run at the retail level
results in higher price increase. In longer run, consumer may have more
options for how to adjust to changes in producer costs or consumer demand.
Even in long run gasoline is still inelastic.
How producer responds to price change will affect how high prices will rise
or fall. Whether high prices bring in additional supply or not will depend on
how costly it is for producer to increase its output. If expanding production
costs little, then a relatively small price increase may be enough to
encourage existing or new producers to ramp-up their production levels to
provide additional supply to meet increased consumer demand. However,
setting up a new production unit for gasoline is costly set-up for a producer.
He has to constantly see a high level of demand and possible hints of
constant profitability to invest high amount of money in setting up a
production unit to meet consumer demand. Rationing by government also is
also one of the factors to stop gasoline market to reach new equilibrium
price. Price controls and rationing do not signal producers to bring more
supply to the market to meet the increased demand or to offset some part of
it. If prices are not allowed to the increase in reaction to supply reduction,
producers have no incentive to provide additional supplies to alleviate the
supply reduction.
ECON 545 Week 3 DQ 1 Mergers Acquisitions
ECON 545 Week 3 DQ 2 Anti-Trust Policy and Microsoft
ECON 545 Week 3 Quiz Imperfect Competition
1.
Question :
(TCO A) There is a decrease in the cost of labor for producing bicycles.
(4 pts.) What happens to bicycle supply?
(6 pts.) What happens to bicycle demand?
2.
Question :
(
2. (TCO A) Ceteris paribus, Diet Cola Brand X and Diet Cola Brand Y are
substitutes in consumption. The price of Diet Cola Brand Y falls.
(4 pts.) a. What happens to the demand for Diet Cola Brand X?
(6 pts.) b. What happens to the demand for Diet Cola Brand Y? (Points : 10)
3.
Question :
(TCO A) The number of new home sellers in a given market decreases.
(4 pts.) What happens to the supply of new homes?
(6 pts.) What happens to the demand for new homes?
4.
Question :
(TCO A) A market is in equilibrium with equilibrium Quantity of MEQ and
equilibrium Price of MEP.
(2 pts.) a. What happens to market equilibrium Price (MEP) if there is an increase
in Demand?
(4 pts.) b. What happens to market equilibrium Quantity (MEQ) if Supply
decreases as Demand increase?
(4 pts.) c. What happens to market equilibrium Price if there is an increase in
Supply followed by a decrease in Demand which if followed by another increase in
Supply?
5.
Question :
5.
The following table shows part of the demand function for tickets to an outdoor
summer concert by a popular singing group:
Price (P)…Quantity (Q)
50……….. 100
35………. 180
20…………300
10…………500
a. (2 pts.) What is demand elasticity in the $35 – $50 price range? Is demand
elastic, inelastic, or of unitary elasticity? Calculate the value and show all of your
work. Be sure to use the midpoint equation to determine elasticity.
b. (4 pts.) Assume demand elasticity is 1.0 in the $20 – $35 price range. In this
range of demand, by what percentage would quantity demanded change if price
decreases by 5 percent? Show your detailed calculations
c. (4 pts.) What is the effect of a price increase from $10 to $20 on total revenue
for the event? Does total revenue (TR) increase, decrease, or remain the same? By
how much? Show your detailed calculations.
6.
Question :
(TCO B) Use a hypothetical example to illustrate whether you agree or disagree
with the following statement: “Unemployment will go up more if the demand for
labor is inelastic because the demand for labor will decrease more when you have
inelastic demand than if demand were elastic.” Explain why, using hypothetical
numbers to illustrate your case.
7.
Question :
(7. TCO C) You have been hired to manage a small manufacturing facility whose
cost and production data are given in the table below.
No. of workers Total Labor Cost Output Total Revenue
1 $145 100 $190
2 290 105 380
3 435 111 840
4 580 120 1320
5 725 125 1650
6 870 129 1780
7 1015 131 1800
(2 points) What is the marginal product of the fourth worker?
(2 points) What is the marginal revenue product of the fifth worker?
(2 points) What is the marginal cost of the second worker?
(4 points) Based on your knowledge of marginal analysis, how many workers
should you hire? Explain you answer. (Points : 10)
8.
Question :
(TCO C) Answer the next question on the basis of the following cost data for a
purely competitive seller:
Total Product TFC TVC
0 $70 $0
1 70 70
2 70 120
3 70 150
4 70 220
5 70 300
6 70 390
Refer to the above data. If the product price is $75 at its optimal output, exactly
how many units should be produced to maximize profits or minimize losses? How
much will the profit or loss be? Show all calculations. (Points : 10)
9.
Question :
(TCO C) (TCO C) Answer the next question on the basis of the following cost data
for a purely competitive seller:
TP TFC TVC
0 $45 $0
1 45 170
2 45 320
3 45 450
4 45 620
5 45 800
6 45 990
Refer to the above data. If the product price is $165 at its optimal output, exactly
how many units should be produced to maximize profits or minimize losses? How
much will the profit or loss be? Show all calculations. (Points : 10)
10.
Question :
(TCO C) A firm has Total Costs (TC) of $10,000 over the next three months
(TOTAL for the 3 months – not per month), of which $6,000 are fixed costs (TFC)
for rent on its lease that cannot be broken. If it stays in business over those months,
then the firm will collect only $5,000 in revenues (TR). So, considering only this
information, should they stay in business for those three months or should they
close down right now? Provide your reasoning.
ECON 545 Week 4 DQ 1 Macroeconomic News
ECON 545 Week 4 DQ 2 Healthcare
ECON 545 Week 5 DQ 1 Trade Deficits
Trade Deficits (graded)
What have been some major causes of the large U.S. trade deficits since 1992?
What is a major benefit (you could address that issue) or a major cost (or you
could address that issue) associated with trade deficits?
what have been some major causes of the large U.S. trade deficits since 1992?
What is a major benefit (you could address that issue) or a major cost (or you
could address that issue) associated with trade deficits?
ECON 545 Week 5 DQ 2 Exchange Rates
Exchange Rates (graded)
Do a little research about foreign exchange traders. It’s a big business; how do
they make money? What is the relationship between FX rates and interest
rates?
Do a little research about foreign exchange traders. It’s a big business; how do
they make money? What is the relationship between FX rates and interest
rates?
ECON 545 Week 5 Project Part 2
Week 5: The Global Economy – Course Project Part 2
Overview: Project Part 2 (PP2) consists of performing application-oriented
exercises wherein the specific economic principles learned in this course are put to
practical use. You must translate your ideas into economic analysis using the
specific economic theory and economic terms contained in the TCOs covered in
the course and demonstrate that you are understanding and utilizing material from
text chapters covered up to this point in the course to receive full credit on the
assignment.
You are being asked to submit a report containing responses to three exercises.
Exercises 1, 2, and 3 entail a choice of three textbook questions out of a list of
possible alternatives.
Exercises 1, 2, and 3
Select any three out of the following questions from the text:
Chapter 15, Question 11
Chapter 15, Question 14
Chapter 16, Question 5
Chapter 16, Question 6
Chapter 16, Question 11
Chapter 25, Question 7
Chapter 25, Question 11
Chapter 25, Question 14
Chapter 26, Question 8
Chapter 26, Question 9
Chapter 26, Question 12
ECON 545 Week 6 DQ 1 Fiscal Policy
Fiscal Policy (graded)
What fiscal policies are required to fight unemployment? Which ones are
required to fight inflation? What are some of the downside risks and potential
problems involved when using fiscal policy?
What fiscal policies are required to fight unemployment? Which ones are
required to fight inflation? What are some of the downside risks and potential
problems involved when using fiscal policy?
ECON 545 Week 6 DQ 2 Monetary Policy
Monetary Policy (graded)
What are the monetary policies required to fight unemployment? What about
those required to fight inflation? What are some of the downside risks and
potential problems involved when using monetary policy?
What are the monetary policies required to fight unemployment? What about
those required to fight inflation? What are some of the downside risks and
potential problems involved when using monetary policy?
ECON 545 Week 6 Monetary and Fiscal Policy – You Decide
Week 6: Monetary and Fiscal Policy – You Decide
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YOUDECIDE
Scenario, Your Role, Key Players
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Click on the link to review the scenario, your role and the key players involved in
this scenario. When you have finished reviewing the You Decide scenario, please
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YOUDECIDE
Activity
Your task is to take this advice and produce your own recommendation to the
President. Do not simply choose one person’s advice; pick and choose from each
recommendation that you receive. Be sure to list what you believe and why you
believe it is sound advice from each of your colleagues along with what you
disagree with and why you disagree with your colleagues. Then, produce a
consolidated recommendation of your own. Your submission should be
approximately one page (250 words) in length, double-spaced.
See “Due Dates for Assignments & Exams” in the Syllabus for due date
information.
Submit your assignment to the Dropbox located on the silver tab at the top of this
page. For instructions on how to use the Dropbox, read these Step-by-Step
Instructions or watch this Dropbox Tutorial.
ECON 545 Week 6 Quiz
Question:
(TCO F) The size of the labor force in a community is 800, and 720 of these folks
are gainfully employed. In this community, 200 people over the age of 16 do not
have a job, and are not looking for work. In addition, 100 people in the community
are under the age of 16. The unemployment rate is:
2.
Question:
(TCO F) Suppose nominal GDP in 2005 was $14 trillion and in 2006 it was $15
trillion. The general price index in 2005 was 100 and in 2006 it was 103. Between
2005 and 2006 real GDP rose by what percent?
3.
Question:
(TCO F) The consumer price index was 185.2 in January of 2004, and it was 190.7
in January of 2005. Therefore, the rate of inflation in 2004 was about:
4. (TCO E) (10 points) As the Euro appreciates in value relative to the U.S. dollar,
what happens to the price of U.S. goods in Europe? What happens to the price of
European goods in the U.S.?
(10 points) Why would a country (for example, China) choose to keep their
currency relatively pegged to the U.S. dollar? If the U.S. dollar were to appreciate
considerably against most currencies, what would be the effect on Chinese exports
to countries other than the United States? (Points : 20)
4.
Question:
(TCO E) (5 points) As the Mexican Peso depreciates in value relative to the U.S.
dollar, what happens to the price of U.S. goods in Mexico? What happens to the
price of Mexican goods in the U.S.?
(5 points) Why would a country (for example China) choose to keep their currency
relatively pegged to the U.S. dollar? If the U.S. dollar were to appreciate
considerably against most currencies, what would be the effect on Chinese exports
to countries other than the U.S.?
5. (TCO E) Suppose the Indian rupee price of one British pound is 54.392 rupees
for each pound. A hotel room in London costs 120 pounds, while a similar hotel
room in New Delhi costs 6,500 Indian rupees. In which city is the hotel room
cheaper, and by how much? (Points : 15)
5.
Question:
(TCO E) Suppose the Japanese yen price of one British pound is 163.78 yen for
each pound. A hotel room in London costs 120 pounds, while a similar hotel room
in Tokyo costs 20,000 Japanese yen. In which city is the hotel room cheaper, and
by how much?
6. (TCO E) Answer the next question on the basis of the following production
possibilities data for Landia and Scandia:
Question:
(TCO E) Answer the next question on the basis of the following production
possibilities data for Landia and Scandia:
Landia production possibilities:
ABCDE
Fish 8 6 4 2 0
Chips 0 10 20 30 40
Scandia production possibilities:
ABCDE
Fish 24 18 12 6 0
Chips 0 12 24 36 48
Refer to the above data. What would be feasible terms of trade between Landia and
Scandia?
8. (TCO F) Country A produces two goods, elephants and saddles. In the year
2006, the 100 units of elephants produced sold for $2,500 per unit and the 30 units
of saddles produced sold for $200 per unit. In 2007, the 120 units of elephants
produced sold for $3,000 per unit, and the 50 units of saddles produced sold for
$300 per unit. Real GDP for 2007, assuming that 2006 is the base year, is ______.
(Points : 15)
9) (TCO E) A Honda Accord sells for $24,000 in the United States and for
SF29,500 in Switzerland. Given an exchange rate of SF1.25 = $1, how do the car
prices of both countries compare?
ECON 545 Week 7 DQ 1 The Public Sector
The Public Sector (graded)
What is the appropriate balance between private and public (i.e., government)
activity? Think of a case where the government has intervened (or it was
suggested that government intervene) in a previously private market (e.g.
Chrysler, tariffs on Japanese luxury cars, the airline industry, etc). What
other examples can you think of? Using a marginal benefit/marginal cost
analysis, support or argue against the intervention.
What is the appropriate balance between private and public (i.e., government)
activity? Think of a case where the government has intervened (or it was
suggested that government intervene) in a previously private market (e.g.
Chrysler, tariffs on Japanese luxury cars, the airline industry, etc). What
other examples can you think of? Using a marginal benefit/marginal cost
analysis, support or argue against the intervention.
The government subsidizing the housing market in trying to help homeowner
stay in their homes has not reached nearly as much of those who need it. They
did the same with the banking system which only shows that their efforts are
not as productive as they would like us to believe. Government intervention in
private activity does not change whether or not the funds will be
mismanagement or the policies that led to the crisis in the first place will be
changed; change should start at the top.
ECON 545 Week 7 DQ 2 Forecasting
Forecasting (graded)
Let’s discuss one of the most important areas of economics, namely the use of
leading economic indicators to forecast the future direction of the
macroeconomy. What websites are helping you gain a better understanding of
where the economy is heading in the next 12 months?
Let’s discuss one of the most important areas of economics, namely the use of
leading economic indicators to forecast the future direction of the
macroeconomy. What websites are helping you gain a better understanding of
where the economy is heading in the next 12 months?
Now more than ever, economists, policy makers, and businessmen need to be
able to form forecasts of key economic aggregates or at least be able to
critically appraise forecasts of official institutions. How much of mathematics
plays a part in forecasting, or does the government go by what they see?
ECON 545 Week 8 Final Exam
1.
Question :
(TCO A) Suppose you are hired to manage a small manufacturing facility that
produces Widgets.
(a.) (15 points) You know from data collected on the Widget Market that market
demand and market supply have both increased recently. As manager of the
facility, what decisions should you make regarding production levels and pricing
for your Widget facility?
Remember that supply and demand are about the market supply and market
demand, which is bigger than your own company. You are being given data on
supply and demand for the whole market and are being asked what effect that has
on you as a small part of that market.
(b.) (15 points) Now, suppose that following the supply and demand changes in
(a), a substitute good goes up in price, and your costs of production increase. What
new decisions will you make regarding production levels and pricing for your
Widget facility?
2.
Question :
(TCO B) Here is some data on the demand for marshmallows:
Price Quantity
$10 100
$ 8 300
$ 6 700
$ 4 1300
$ 2 2200
(a.) (15 points) Is demand elastic or inelastic in the $6-$8 price range? How do you
know?
(b.) (15 points) If the table represents the demand faced by a monopoly firm, then
what is that firm’s marginal revenue as it increases output from 1300 units to 2200
units? Show all work. (Be careful here!)
3.
Question :
(TCO C) You have been hired to manage a small manufacturing facility whose
cost and production data are given in the table below.
Total Total
Workers Labor Cost Output Revenue
1 $500 100 $700
2 1000 280 1150
3 1500 440 1440
4 2000 540 1570
5 2500 600 1670
6 3000 630 1710
7 3500 640 1730
(a.) (6 points) What is the marginal product of the second worker?
(b.) (6 points) What is the marginal revenue product of the fourth worker?
(c.) (6 points) What is the marginal cost of the first worker?
(d.) (12 points) Based on your knowledge of marginal analysis, how many workers
should you hire? Explain you answer.
4.
Question :
(TCO C) Answer the next questions on the basis of the following cost data for a
firm in pure competition:
OUTPUT —— TFC ———- TVC
0 $100.00 0.00
1 100.00 70.00
2 100.00 120.00
3 100.00 150.00
4 100.00 200.00
5 100.00 270.00
6 100.00 360.00
(a.) (15 points) Refer to the above data. If the product price is $45 at its optimal
output, will the firm realize an economic profit, break even, or incur an economic
loss? How much will the profit or loss be? Show all calculations.
(b.) (15 points) Refer to the above data. If the product price is $75 at its optimal
output, will the firm realize an economic profit, break even, or incur an economic
loss? How much will the profit or loss be? Show all calculations.
5.
Question :
(TCO D) A software producer has fixed costs of $18,000 per month and her Total
Variable Costs (TVC) as a function of output Q are given below:
Q TVC Price
1,000 $15,000 $25
2,000 20,000 24
3,000 30,000 23
4,000 50,000 22
5,000 80,000 20
(a.) (15 points) If software can only be produced in the quantities above, what
should be the production level if the producer operates in a monopolistic
competitive market where the price of software at each possible quantity is also
listed above? Why? (Show all work).
(b.) (15 points) What should be the production level if fixed costs rose to $48,000
per month? Explain.
6.
Question :
(TCO F)
(a.) (20 points) Suppose nominal GDP in 1999 was $200 billion, and in 2001, it
was $270 billion. The general price index in 1999 was 100 and in 2001 it was 150.
Between 1999 and 2001, the real GDP rose by what percent?
(b.) Use the following scenario to answer questions (b1) and (b2).
In a given year in the United States, the total number of residents is 270 million,
the number of residents under the age of 16 is 38 million, the number of
institutionalized adults is 15 million, the number of adults who are not looking for
work is 17 million, and the number of unemployed is 10 million.
(b1.) (5 points) Refer to the data in the above scenario. What is the size of the labor
force in the United States for the given year?
(b2.) (5 points) Refer to the data in the above scenario. What is the unemployment
rate in the United States for the given year?
7.
Question :
(TCO G and H)
(a.) (15 points) Suppose your local Congress representative suggests that the
federal government intervenes in the gasoline market to stop runaway price
increases. Would you say that this view basically supports the Keynesian or the
Monetarist school of thought? Why? What position would the opposing school of
thought take on this issue? (Be brief — you can answer this in 2 or 3 brief
paragraphs).
(b.) (10 points) Any change in the economy’s total expenditures would be expected
to translate into a change in GDP that was larger than the initial change in
spending. This phenomenon is known as the multiplier effect. Explain how the
multiplier effect works.
(c.) (15 points) You are told that 90 cents out of every extra dollar pumped into the
economy goes toward consumption (as opposed to saving). Estimate the GDP
impact of a positive change in government spending that equals $20 billion.
8.
Question :
(TCO G)
(a.) (20 points) Third National Bank is fully loaned up with reserves of $20,000
and demand deposits equal to $100,000. The reserve ratio is 20%. Households
deposit $5,000 in currency into the bank. How much excess reserves does the bank
now have, and what is the maximum amount of new money that can be created in
the banking system as a result of this deposit? Show all work.
(b.) (20 points) What is the discount rate in the banking system? Explain how the
Fed manipulates this rate to achieve macroeconomic objectives.
9.
Question :
(TCO E and I) Let the exchange rate be defined as the number of dollars per
British pound. Assume there is a decrease in U.S. interest rates relative to that of
Britain.
(a.) (10 points) Would this event cause the demand for the dollar to increase or
decrease relative to the demand for the pound? Why?
(b.) (10 points) Has the dollar appreciated or depreciated in value relative to the
pound?
(c.) (10 points) Does this change in the value of the dollar make imports cheaper or
more expensive for Americans? Are American exports cheaper or more expensive
for importers of U.S. goods in Great Britain? Illustrate by showing the price of a
U.S. cell phone in Britain before and after the change in the exchange rate.
(d.) (10 points) If you had a business exporting goods to Britain, and U.S. interest
rates fell as they have in this example, would you plan to expand production or cut
back? Why?