ECONAssignment

A -ESSAY QUESTIONS: ANSWER 2 of THE FOLLOWING :1-GDP as a Measure of Well-being- Mayer describes the importance of GDP as a measureof our economic well-being. But they also note that this measure omits some things that areimportant in describing how well-off we are. Provide 3 specific examples of things thatyour think are important to you or to society, but which are are omitted from the GDPmeasure.2-Elaborate on the concept of Technology changes & innovation with reference toeconomics- How does Technology affect costs and profit? Give examples. What is the Valueof information in promoting economic process in general?3-GDP and Income Inequality- Brad Plumer, the Post’s Wonkblogger, describes andcritiques several ways in which income inequality is thought to affect the rate of growth ofa country’s GDP. Explain one of these possible effects, and comment on why you agree ordisagree that inequality affects GDP B-TRUE/FALSE1- Producers use inputs, or resources, to produce their goods.2-If unemployment rises when beer consumption rises, then the statement “Rising unemployment is theresult of increased beer consumption” is an example of the ceteris paribus fallacy.3-The study of inflation and unemployment in East Timor is in the realm of microeconomics.4- According to the law of demand, if the price of a netbook decreases, ceteris paribus, the demand fornetbooks would increase.5- Assume that the supply curve for tomatoes is upward sloping. If the price per pound increases from$0.99 to $1.89, a greater quantity of tomatoes will be supplied to the market.6- GDP is based on the market value of goods and services produced in an economy and not on the valueof only final goods and services.7- To arrive at a more accurate measure of real output changes in an economy, nominal GDP figuresshould be adjusted for inflation.8-The price elasticity of demand depends on how readily and easily consumers can switch their purchasesfrom one product to another.9-The World Bank was created to help finance economic development in poor countries.10- Fixed exchange rates serve as a constraint on inflationary government policies.2- 11- Appreciation of the dollar means that now it takes more dollars to buy one unit of foreign currency.12- 1 12-Because of their greediness, speculators are considered bad for exchange-rate markets.13-The theory of bounded rationality states that it is likely for consumers to have perfect information.14- As the price of a good declines, a utility-maximizing consumer will respond by purchasing more ofthat good.15- If cherries cost twice as much as dates, and the last cherry consumed provides twice as much utility asthe last date consumed, the consumer is maximizing utility. C- CASE QUESTIONS: PLEASE ANSWER 1 OF THE FOLLOWING SETOF CASE QUESTIONSBecause the primary goal of a “for profit” business is to make as much profit as possible or tomaximize that profit, it should follow that the activities of the business would focus on efficiency andeffectiveness of operations. Economists often put this into a graphical display whereby the dollaramount of profit is plotted against quantity of output overt time. It is theorized that the profitmaximizing quantity of output is the point on the graph where marginal revenue equals marginalcost.(A) Explain what is meant by marginal revenue. Choose a business and discuss the marginal revenueof that business.(B) Explain what is meant by marginal cost. What does marginal cost mean in your life? ORMaxi-mum corporation is looking at two major projects either of which, if successful, could put Maximum at the top of management consulting industry section. The first project is a $14,000,000 contractto help a fortune 100 company change its corporate culture. This project would involve moving theoperations function to another city and would take 3 years of intensive training and consultation. Thesecond project is valued at $15,000,000 and will involve helping management to reshape thecorporate image of a former industry leader that has undergone a decline in market share andcustomer satisfaction. This project will also involve 3 years of intensive consultation efforts. Maximum cannot do both projects because either project will require that Maxi-mum invest 80% or more ofits resources into completing successfully. The CFO has heard about opportunity cost but is not surewhat it really means.(A). What is opportunity cost? Explain what is meant by trade-offs.(B). What is the production possibility curve, and can it be used in a business you researched on theInternet? Explain. D-MULTIPLE CHOICE -PLEASE ANSWER THE FOLLOWING1- Identify the logic of economics that those who have not studied economics may fail to understand.a. The implicit cost of a commodity is always higher than the explicit cost.2 b.c.d.e. Individual wants are limited by means.Private goods do not have a social cost.Public goods are available to us freely.There are costs to everything. 2- Economics is the study of how people use:a. their scarce resources to satisfy their basic wants.b. their scarce resources to attempt to satisfy their unlimited wants.c. the natural resources to satisfy their basic wants.d. the natural resources to attempt to satisfy their unlimited wants.e. their resources to influence the tastes and preferences of others.3- Which of the following is an example of capital as a factor of production?a. Products such as machinery and equipment that are used in the production processb. The financial condition of a privately held corporationc. The value of a company’s stock on the New York Stock Exchanged. A company’s outstanding liabilitiese. A business cash flow4- Which of the following is true of microeconomics?a. It is often a focal point of debates in a presidential campaign.b. It is the study of the behavior of individual firms and individual consumers.c. It is often focused on the tradeoff between the rate of inflation and the unemployment rate.d. It is based on theories that help us understand the relationship between the money supplyand interest rates.e. It is the study of the economy in aggregate.5- Which of the following is considered a macroeconomic question?a. How can one particular firm maximize profits?b. How does a family allocate income among various available goods and services?c. How can economic policy fight inflation?d. What factors determine the wage rate in a certain industry?e. What is the impact of competition on the profits of a business?6- Money exchanges are more efficient than barter because:a. money exchanges do not require a double coincidence of wants.b. the government guarantees the value of money.c. money usually has an intrinsic value.d. money is backed by a physical commodity.e. opportunity costs are higher with barter trades.7- The amount of a product that people are willing and able to purchase at a specific price is referred to asthe:a. demand.b. quantity demanded.c. law of demand.d. consumption function.e. purchasing power.8- Which of the following statements correctly defines the law of demand?a. The lower the price of a commodity, the lower the quantity demanded of that commodity.3 b. As the price of a commodity increases, the quantity demanded of that commodity alsoincreases.c. The lower the price of a commodity, the greater the quantity of that commodity that isdemanded.d. The lower the price of a commodity, the greater the quantity of that commodity that issupplied.e. The quantity demanded of a particular good decreases with an increase in the price of asubstitute good.9- Which of the following is true of the law of supply?a. The law of supply is the sole determinant of market prices.b. The law of supply states that as the price of a good rises, the quantity supplied rises.c. The law of supply holds good only in the long-run.d. The law of supply is valid only in a market system of allocation.e. The law of supply asserts that as the cost of producing a good rises, the quantity suppliedrises.10- Which of the following is true of a price floor?a. A price floor allows supply and demand to function effectively.b. A price floor is set such that the price is not all
owed to increase above a certain level.c. A price floor is beneficial to buyers in a market.d. A price floor usually creates a shortage of a good in a market.e. A price floor is set such that the price is not allowed to decrease below a certain level.11-To avoid double counting in calculating GDP,a. net exports should be excluded.b. the value of intermediate goods and services should be excluded.c. the capital consumption allowance should be excluded.d. business investment should be excluded.e. government purchases should be excluded.12- Which of the following accounts for the largest percentage of output in the United States?a. The governmentb. Business firmsc. Householdsd. Bankse. The rest of the world13- Which of the following can be a valid reason for Canada’s GDP exceeding its GNP in 2001?a. Net factor income from abroad in Canada was negative.b. Canada’s GNP measurements were flawed.c. Canada’s indirect business taxes were exceptionally high.d. The World Bank underestimated Canada’s net exports.e. Canada’s residents received more foreign aid than they could spend.14- In terms of price indexes, what is a COLA?a. A measure of the quality of livingb. A consumer price adjustmentc. An increase in wages designed to match consumer price increases4 d. An estimate of gross domestic producte. A measure of producer surplus15-Which of the following is explained by the price elasticity of demand?a. The effect of price changes on supply.b. The effect of quantity changes on supply.c. The effect of quantity changes on price.d. The effect of price changes on quantity demanded.e. The effect of price changes on quantity supplied.16- A 0.5% increase in the price of a particular product causes the quantity demanded of the product todrop to zero. This means that the price elasticity of demand for the product is:a. moderately inelastic.b. highly inelastic.c. unitary elastic.d. perfectly inelastic.e. perfectly elastic.17If $1 was equivalent to 120 Japanese yen in 2008 and 125 Japanese yen in 2010, it implies in2010, there was:a. a depreciation of the dollar against the yen.b. a depreciation of the yen against the dollar.c. an appreciation of the yen against the dollar.d. no change in the value of yen, but the dollar had weakened.19-For a given product, income elasticity of demand relates the percentage change in:a. quantity demanded to the percentage change in income.b. quantity demanded to the absolute change in income.c. income to the percentage change in price.d. price to the absolute change in quantity demanded.e. income to the percentage change in quantity available for sale.20- A commodity money standard exists when exchange rates are:a. artificially pegged to the price of oil.b. fixed in terms of gold, thus creating flexible exchange rates between countries.c. fixed in terms of gold, thus creating fixed exchange rates between countries.d. allowed to fluctuate based on the values of different currencies.e. fixed, based on the values of different currencies, in terms of some commodity.21-A measure of the responsiveness of quantity supplied to changes in price is known as_____.a. cross-price elasticityb. price elasticity of demandc. price elasticity of supplyd. income elasticitye. point elasticity22- Utility is most closely defined as _____.a. the purchasing power of individualsb. welfare maximization5 c. a medium of exchanged. satisfactione. an opportunity cost23-When economists describe the theory of consumer choice, theya. portray people as simple and methodical with perfectly predictable patterns of behavior.b. assert that consumers decide which goods and services give them the greatest utilitywithin their limited incomes.c. point out that consumers rarely consider utility in their purchase decisions; they look atother factors like convenience, peer behavior, and price.d. assert that the retail price is the only variable consumers really consider in making theirpurchasing decisions.e. admit that consumer behavior is random and there is no credible economic theory toexplain the phenomenon.24-Marginal utility is _____.a. always greater than total utilityb. utility that is not as good as normal utilityc. the extra utility derived from consuming one additional unit of a good or serviced. always positivee. not related to total utility25- Jason is trying to decide whether to buy a bagel or a muffin for breakfast. The bagelcosts $.50 and has a marginal utility of 5. The muffin costs $1 and has a marginal utility of20. Which should he buy, and why?a. The muffin, because it has a higher marginal utilityb. The muffin, because it has a lower marginal utility per dollarc. The bagel, because it costs lessd. The bagel, because it has a higher marginal utility per dollare. The muffin, because it has a higher marginal utility per dollar a.b.c.d.e. 26- Which of the following can be categorized as a commodity money standard?The pegged exchange rate standardThe free float standardThe managed float standardThe reserve currency standardThe gold standard 27- The exchange-rate arrangement that emerged from the Bretton Woods conference is often referred toas the:a. dollar exchange standard.b. euro exchange standard.c. gold exchange standard.d. silver exchange standard.e. flexible exchange rate standard.28- A reserve currency is a currency that is:a. used exclusively to settle domestic debts.6 b.c.d.e. specifically designed for use by commercial banks to settle accounts.held only by bureaucrats.used to settle international debts by private corporations.held by governments to facilitate foreign exchange market interventions. 29- The focal point of the Bretton Woods system was the:a. Great Britain pound.b. institution of special drawing rights.c. U.S. dollar.d. gold reserve.e. management of commodity money.30- Foreign exchange market intervention is most effective when:a. each country’s political leaders agree to cooperate fully with the process.b. leading economists in each country concur that intervention is needed.c. permanent differences between the free market exchange rate and the fixed exchange rateare expected.d. temporary differences between the free market exchange rate and the fixed exchange rateare expected.e. all the countries restrict the international movement of goods and services.31- The exchange rate that is established in the absence of foreign exchange market intervention by thegovernment is known as a(n):a. historical anachronism.b. fixed exchange rate.c. “dirty float” exchange rate.d. unmanaged exchange rate.e. free market equilibrium exchange rate. 32- What is a currency board?a. A fixed exchange rate that, by law, exchanges domestic currency for a specified foreigncurrency at a fixed exchange rate.b. A floating exchange rate.c. A managed floating exchange-rate policy that the government adjusts periodicallyaccording to some economic indicator.d. A laissez-faire exchange-rate policy.e. An interventionist exchange-rate policy.33- Assume that a country’s government influences the exchange rate through active central bankintervention, with no pre-announced path. This policy is known as a(n):a. floating exchange-rate policy.b. managed floating exchange-rate policy.c. fixed exchange-rate policy.d. crawling-peg exchange-rate policy.e. interventionist exchange-rate policy34- Equilibrium in the foreign exchange market occurs:7 a. at the point where the foreign exchange demand and supply curves intersect.b. at the point where the foreign exchange demand and supply curves reach maximumseparation.c. when two nations’ economic leaders agree on the appropriate exchange rate.d. when two nations’ diplomatic leaders agree on an exchange rate that meets both countries’needs.e. only by chance, if at all, because they change very frequently.35- The supply of Thai baht in the foreign exchange market originates with:a. tourists who go on vacation to Thailand.b. the export of Thailand oranges and other goods.c. Thai residents who wish to purchase goods from other countries.d. the Thai royal family.e. Thai central bank intervention to stop the peseta from depreciating.3- E-SHORT QUESTIONS: ANSWER ONLY 5 OF THE FOLLOWING:1- Why study Economics in In
formation Age? What is the difference betweenMacroeconomics and Microeconomics? Give examples to substantiate your answer.2-Why does the demand curve slope down? Why does the supply curve slope up? Giveexamples.3-What is GDP? How it is different from GNP? Does information technology help inassessing the GDP more accurately? How helpful it is for Economist in forecasting for future?4-How do individuals of one nation trade money with individuals of another nation?5- List the goods you believe are price inelastic and price elastic and explain why.6- 0How do changes in exchange rates affect international trade? How do nations recordtheir transactions with the rest of the world?7- Define foreign exchange and the foreign exchange market. PROVIDE EXAMPLES.Distinguish between appreciation and depreciation of a currency. PROVIDE EXAMPLES 8