all QUESTIONS
MGPARKES
exam_questions.docx
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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 two or three brief paragraphs.) (15 points) (Part B) 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. (10 points) (Part C) You are told that 80 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 $200 billion.
Third:
(TCO C) John operates a small business out of his home and has very little in terms of fixed costs. Answer the next questions (Parts A and B) on the basis of the following cost data for John’s firm operating in pure competition. (20 points)
|
Output |
TFC |
TVC |
|
0 |
$30.00 |
0.00 |
|
1 |
$30.00 |
70.00 |
|
2 |
$30.00 |
120.00 |
|
3 |
$30.00 |
150.00 |
|
4 |
$30.00 |
200.00 |
|
5 |
$30.00 |
270.00 |
|
6 |
$30.00 |
360.00 |
(Part A) Refer to the above data. If the product price is $70, 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. (10 points) (Part B) 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.
Fourth
The supply and demand schedules for tickets to basketball games in town of Oakwood are given in the table below. (20 points)
|
Price |
Quantity Demanded |
Quantity Supplied |
|
$6 |
3,000 |
3,000 |
|
7 |
2,500 |
3,000 |
|
8 |
2,000 |
3,000 |
|
9 |
1,500 |
3,000 |
|
10 |
1,000 |
3,000 |
The stadium owners need to find the optimum price for the games. (Part A) What are the coefficients of elasticity of supply and demand if the price is raised from $6 to $8? (8 points) (Part B) Characterize the demand and supply for tickets based on the calculated elasticities. (4 points) (Part C) What is the optimum price that the stadium owners can set for the tickets? (4 points) (Part D) Why is the selected price for the tickets better than other prices given in the table above?
You have been hired to manage a small manufacturing facility whose cost and production data are given in the table below. (20 points)
|
Workers |
Total Labor Cost |
Output |
Total Revenue |
|
1 |
$100 |
50 |
$150 |
|
2 |
$200 |
175 |
$275 |
|
3 |
$300 |
275 |
$355 |
|
4 |
$400 |
355 |
$425 |
|
5 |
$500 |
425 |
$485 |
|
6 |
$600 |
485 |
$535 |
|
7 |
$700 |
525 |
$575 |
Based on your knowledge of marginal analysis, how many workers should you hire? Explain
John operates a small business out of his home and has very little in terms of fixed costs. Answer the next questions (Parts A and B) on the basis of the following cost data for John’s firm operating in pure competition. (20 points)
|
Output |
TFC |
TVC |
|
0 |
$30.00 |
0.00 |
|
1 |
$30.00 |
70.00 |
|
2 |
$30.00 |
120.00 |
|
3 |
$30.00 |
150.00 |
|
4 |
$30.00 |
200.00 |
|
5 |
$30.00 |
270.00 |
|
6 |
$30.00 |
360.00 |
(Part A) Refer to the above data. If the product price is $70, 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. (10 points) (Part B) 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
