ECON102 Lecture Notes - Lecture 1: Microeconomics, Macroeconomics

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3 Aug 2016
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Review Exercise, Chapter I and II
1. If the Canadian government redistributes income from the rich to the poor,
explain how this action affects equity as well as efficiency in the economy.
2. With the understanding that people respond to incentives, outline the possible
outcome for teachers if the K-12 school year is extended to 11 months per
year instead of the existing 10 months per year. -> make more $$ vs less time
off
3. Identify each of the following topics as being part of microeconomics or
macroeconomics:
a
.
the impact of a change in consumer income on the purchase of luxury
automobiles
b
.
the effect of a change in the price of Coke on the purchase of Pepsi
c
.
the impact of a war in the Middle East on the rate of inflation in
Canada-maco
d
.
factors influencing the rate of economic growth-macro
e
.
factors influencing the demand for tractors-macro
4. You are selling your 1996 Mustang. You have already spent $1000 on
repairs. At the last minute, the transmission dies. You can pay $600 to have
it repaired, or sell the car as is.In each of the following scenarios, should
you have the transmission repaired? Explain.
A. Blue book value is $6500 if transmission works, $5700 if it doesnt-
yes
B. Blue book value is $6000 if transmission works, $5500 if it doesnt-
no
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5. What is the difference between a straight line and a bow shape PPF? What
accounts for this difference?
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