econ

1 ECON 101 Name _____________________________ Section that meets on _________ Take - Home Quiz #2 THIS IS PART I: ELASTICITY : SHORT ANSWERS, PROBLEMS AND GRAPHS . Use space provided. Add pages if needed but label question numbers clearly. Keep copy for when we review in class. . Due Thursday 10/8/20 at 9 am

- 11 points 4 pts for on –time submission and if all questions answered. (1 point deducted for each minimally answered or blank question)

- 7 pts on accuracy (7-6 Excellent) (5-4 Satisfactory) (3-2 Needs Improvement) (1 No Pass)

- Evaluated also on effort towards your participation grade (as E/S/NS ) Effort means good detail

in explanations. This is still part of the learning process so a student may get an A even if there are few errors. So be sure to give it a serious try. Partial credit given.

- Print the pdf, write your answers and upload file to Canvas in “Assignments’ that will be created for this part.

Part II – Essay - 10 points ( A separate assignment will be created and posted in the module for this part ) To be submitted electronically on Canvas by Thursday 10/8/20 by 11:30 pm-

PART I : PROBLEMS Show method/ all work and explanations in the spaces provided.

1. Consider the elasticity of supply : If the price of a median house in Los Angeles used to be $575,000 but is now $500,000 and, as a result ,the number of new house permits to build has changed from 180,000 to 160,000 then the Elasticity of Supply must be equal to _______ (include sign ) .Show method/calculation then illustrate what is happening with a graph and plug the appropriate numbers on your graph.

2

2 (a) If the a bottler named Carvallo in the Mexican Coke article had marked up the retail price of Mexican Coke by 67% and the elasticity of demand were 0.3 then we can predict that the quantity of Mexican Coke should have ______ ( increased ;decreased ) by _________ Show method here:

b) In 1986 the price elasticity of demand was estimated for the goods below. Do you think the numbers today would be higher? Lower? The same? You must defend your answer with valid discussion Milk – 0.54 Beef – 0.35. (c)Tue or False? _______The government wants to raise tariffs on foreign cars that are gas guzzlers to discourage people from buying them because they are bad for the environment . Then such cars are considered ‘inferior’. Explain briefly d) In the “ Sex, Booze and Drugs’ article, paragraphs #1- #9 only, find evidence in the text that reflects i)the concept of Cross Elasticity of demand. Quote from the text between “ “ ii) Quote from the text between “ “ evidence that reflects Elasticity of Supply e) The economic journal ‘Advanced Econometrics Supplement’ reported the estimates of income elasticities of demand for food for the countries listed below They are not listed in order. Match the country with the ‘most likely’ income elasticity value and write the value beside the country. make sure you at least try solving this puzzle. Be guided by what we learned to solve this puzzle. 0.14 United States ______ 0.76 Canada ____ 0.15 France_____ 0.67 China_____ 0.25 India _____

3 3. In the article on Mexican Coke, it says that the Coca Cola Company had fined Arca $500 like a penalty for selling Mexican coke. If so, and based on our lectures, who will end up paying the bigger burden of this penalty? Arca or its buyers? Use words and a graph to briefly explain/ 4. For each of the following, state if the reaction is Elastic? Inelastic? Unitary elastic? Perfectly elastic? Perfectly inelastic? Support your answer as instructed and remember : Be guided by theory . . a) An international student was quoted as saying,” I would give up none of my units if they raise tuition by another 15%” ; his unemployed American classmate felt he would give up 10% of them, however. Reaction is _____________________ Support with calculation or explanation

. b) A GCC student was quoted as saying “My budget is to spend $100 on books!” show the reaction with a graph and explain briefly why. c ) Wall Street Journal: In January 2016 Uber announced it was slashing prices for rides across town. Mr. Alvi , 28, has driven for Uber for three years. He said, “last month we were hit by a huge storm and business was slow, but now…. lower fare!!! That is too much! ” Him and three others pledged to turn their phones off for three days. The Supply curve each of the four drivers, as a result, is ___________________________________ Explain / show why with a graph.

4 5 . Read the short article on page 13 of your packet entitled “What’s In Fashion This Fall “. It is about events/strategies involving the store, Banana Republic. Consider it as an application of the lectures so far: Answer graphically. Using supply and demand suggest a graph that can represent the reactions /strategies described by the events. You MUST EXPLAIN any changes you show Explanation evaluated as well. PART II ESSAY/ Discussion See separate pdf in module. Also separate Assignment will be created for submission. Due Th 10/8/20 11:30 pm