I've completed this but I want to check my answers. Thanks
1) List and briefly explain three economic variables that shift the Demand Curve.
2) Define opportunity cost. How is opportunity cost used to determine comparative advantage?
3) In the market for calculators we observe that the price has fallen and more calculators are being sold. What might have happened to cause this change?
4) The price of gasoline rises. What would we expect to see happen in the market for cars with high gas mileage (like the Prius)?
5) What is the effect of a price floor (a price set above equilibrium) in the sugar market. Why does the government impose price floors?
6) Define the price elasticity of demand. Why is this concept important in economics?
7) Define the income elasticity of demand. Why is this concept important in economics?
8) List and briefly explain three economic variables that shift the Supply Curve.
9) A firm lowers of price of its product by 10% and consumers buy 5% more of the product. What is the price elasticity of demand for the product?
10) If the price elasticity of demand for a product is elastic, explain what will happen to total revenue when the price is decreased.
11) What is the difference between a change in quantity supplied and a shift in supply?
12) Write out the equation for the arc price elasticity of demand using symbols. Then write out the equation using the following numbers: the price increases from $8 to $10 and the quantity demanded falls from 3 units to 2 units. (Do not calculate the equation.)
Three Questions (no choice)
Long Answer Questions (20 points each)
Be certain to label all graphs. Write all explanations in complete sentences.
1) Draw a supply and demand graph for the market for oranges.
Illustrate and explain what happens with when a freeze destroys part of the crop.
2) Draw an increasing cost Production Possibilities Curve (PPC) for the U.S. with computers on the horizontal axis and textiles on the vertical axis.
a) What is the definition of a PPC
b) Choose a point on the PPC. What does this point represent?
c) Illustrate the opportunity cost of producing more computers.
d) Explain a point inside the PPC.
e) Explain a point outside the PPC.
f) Technological change reduces the cost of producing computers and textiles, illustrate and explain what happens in the graph.
g) Choose a new point that represents production and consumption after technological change.
h) Where does the U.S. produce and consume relative to before technological change.
i) Illustrate and explain the opportunity cost of producing more computers after technological change.
3) Define the price elasticity of demand. What does elastic, inelastic and unitary price elasticity of demand mean? For each of the three values of the price elasticity of demand explain what happens to quantity demanded and total revenue when the price of the product is increased? What about when the price of the product is decreased?
4) Using a supply and demand graph in the market for bread, illustrate and explain the effect of a price ceiling (Price set below equilibrium price).
Why would the government impose such a price ceiling?
How is the available bread distributed to consumers when there is a price ceilin
