Economics assessment one and two

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MBA-FP6008 Helpful Hints

Helpful Hints for Learners

u01a1 Economic Problems, Set 1

Assessment 1, Problem A

Production Possibilities

Type of Production

Production Alternative

A

Production Alternative

B

Production Alternative

C

Production Alternative

D

Production Alternative

E

Production Alternative

F

Production Alternative

G

Butter 0 1 2 3 4 5 6

Guns 14 13 11 9 7 4 0

Hints 1. Type your data into an Excel spreadsheet. 2. With your mouse, highlight the data only. 3. Go to Insert. 4. Click Scatter. 5. Click Scatter with Smooth Lines chart. 6. Select the line chart. 7. Plot data drawing line.

u03a1 Economic Problems, Set 2

Assessment 3, Problem A To answer this question you must use the midpoint formula. Assume we have the two ordered pairs (Q1, P1) and (Q2, P2).

Assessment 3, Problem B

Supply and Demand Use Excel to create a supply and demand chart. Helpful hints are available on the Internet by searching for “create supply and demand chart in Excel.”

Assessment 3, Problem C

Supply and Demand Graph each scenario in order to fully understand the concepts.

u04a1 Economic Problems, Set 3

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MBA-FP6008 Helpful Hints

Assessment 4, Problem A Here, Marginal Cost (MC) is Constant, which implies that Average Variable Cost (AVC) is constant and equals MC. This does not imply Average Total Cost (ATC) is constant or has to equal MC. Total Cost (TC) = Fixed Cost (FC) + Variable Cost (VC). Divide through by the quantity Q, which implies TC/Q = FC/Q + VC/Q. This gives us ATC = AFC + AVC.

Assessment 4, Problem B At a product price of $10, will this firm produce in the short run? If it is preferable to produce, what will be the profit-maximizing or loss-minimizing output? What economic profit or loss will the firm realize per unit of output?

The rule is to produce at the level of output where Marginal Revenue equals (or is greater than, if we are using integers) Marginal Cost, as long as revenue is sufficient to cover fixed cost (Price is greater than Average Fixed Cost).

Make sure that you indicate the specific profit/loss maximizing output all three scenarios.

Assessment 4, Problem C To be in long run equilibrium the firm must be producing at the minimum points on their Average Total Cost (ATC) curves.

Assessment 4, Problem D Consider whether the market price is below the minimum Average Variable Cost (AVC) as compared to ATC.

u06a1 Economic Problems, Set 4

Assessment 6, Problem A You may find the following Internet resources useful, as you complete this assessment: • Jochumzen, P. (2010). Essentials of macroeconomics. London, GBR: Bookboon. • McAfee, P. R. (2006). Introduction to economic analysis. Retrieved from

http://www.mcafee.cc/Introecon/IEA.pdf

Assessment 6, Problem B You may find the following Internet resources a good place to start, as you complete this assessment: • U.S. Census Bureau. (n.d.). Current population survey annual social and economic

supplement (CPS ASEC). Retrieved from https://www.census.gov/hhes/www/poverty/publications/pubs-cps.html

• Russell Sage Foundation. (n.d.). Chartbook of social inequality. Retrieved from http://www.russellsage.org/sites/all/files/chartbook/Income%20and%20Earnings.pdf

• U.S. Census Bureau. (n.d.). Income data. Retrieved from http://www.census.gov/hhes/www/income/

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MBA-FP6008 Helpful Hints

Assessment 6, Problem C a. Solve for Y. b. The Marginal Propensity to Consume = Change in Consumption/Change in Income. c. The Multiplier = 1/MPC.

You may find Chapter 11 of the following text useful, as you complete this assessment: • Jochumzen, P. (2010). Essentials of macroeconomics. London, GBR: Bookboon.

You might also find the following Internet resource helpful: • McAfee, P. R. (2006). Introduction to economic analysis. Retrieved from

http://www.mcafee.cc/Introecon/IEA.pdf