micro economics

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Online Quizzes

Please answer to the following five questions and sent your answer along with cover

sheet to my E-mail “[email protected]”. Each question has four

choices, and you should select one of the choices.

1. A firm in NSW grows onions, and sells them at the Sydney market for $4 per

kilogram. By adding compost to the firm, owner of the firm can increase his yield

as shown in the following table. If compost costs $10 per bag and goal of the owner

is to make as much profit as possible, how many bags of compost should you add?

(2 marks)

Bags of Compost Kilograms of Onions

0 100

1 110

2 115

3 118

4 120

5 121

6 121

2 bags A

3 bags B

5 bags C

6 bags D

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2. In a computer repairing shop, Tom can repair 10 computers per day or respond to

15 clients by phone per day. Jerry can repair 5 computers per day or respond to 20

clients by phone per day. Who has an absolute advantage in responding to clients?

What is Tom's opportunity cost of repairing a computer? Who has a comparative

advantage in repairing computers? (2 marks)

Jerry, 2, Tom A

Jerry, 1, Jerry B

Jerry, 1.5, Tom C

Tom, 1.5, Jerry D

3. In the computer repairing shop example, assume that there is only Tom as a worker

in economy. He allocates his time between repairing computers and responding to

clients by phone. Each hour he devotes to repairing computer yields 5 computers,

and each hour she devotes to responding clients yields 10 responds. The number of

Tom’s working hours is 8 hours per day. Use simple algebra, what is the equation

of Tom’s production possibilities curve (PPC)? (2 marks)

Note: D denotes the number of computers repaired per day and B denotes the number of

responds to clients by phone per day.

𝐷 = 40 − 0.5𝐵 A

𝐷 = 40 + 0.5𝐵 B

𝐷 = 40 + 0.1𝐵 C

𝐷 = 40 − 0.1𝐵 D

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4. Explain whether the following pairs of goods are complements or substitutes? (2

marks)

i. Beef and chicken

ii. Coffee and coffee milk

iii. Chocolate and chocolate milk

iv. Public university and private university

i. Substitute

ii. Complements

iii. Complements

iv. Complements

A

i. Substitute

ii. Substitute

iii. Complements

iv. Substitute

B

i. Substitute

ii. Complements

iii. Complements

iv. Substitute

C

i. Substitute

ii. Complements

iii. Substitute

iv. Complements

D

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5. Use supply and demand analysis to predict what will happen to the equilibrium

price and quantity of car if Australian government halves road tax for each car and

mechanizes all steps of the production of a car in Australian car production

factories? (2 marks)

i. Decrease

ii. Decrease

A

i. Increase

ii. Decrease

B

i. Decrease

ii. Increase

C

i. Increase

ii. Increase

D