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Economics
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Economists, like mathematicians, physicists, and biologists,

a. make use of the scientific method.

b. try to address their subject with a scientist's objectivity.

c. devise theories, collect data, and then analyze these data in an attempt to verify or refute their theories.

d. All of the above are correct.

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Divya Singh
Divya SinghLv10
29 Mar 2021
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Related questions

You have been hired as a business analyst by Big Daddy’s Quik-ee Mart. Big Daddy has collected demand data on 3 products that he sells: Gasoline, Milk and Little Mama’s Chocolate Cookies™. The data is presented in the tables on the next page. Currently all three of these products are priced at $3.50 per unit. Big Daddy would like you to use this data and your knowledge of the price elasticity of demand to make suggestions about pricing strategies that might increase revenues for the Quik-ee Mart.

There is one problem. When Junior (Big Daddy’s son) collected the data, he forgot to label the columns in the spread sheet, so now there is no way to tell which data goes with which of the 3 goods.

Big Daddy is very well known in the local community, so performing well on this job will guarantee you many more consulting jobs in town. Even though there is an important piece of information missing you must still try to help Big Daddy.

Use the data to calculate the arc elasticity of demand for each product using each pair of prices and quantities. (That is, calculate the arc elasticity between $2.00 and $2.50, between $2.50 and $3.00, etc.).

Given what you know about the price elasticity of demand, can you now guess which set of data belongs to which product? Explain your reasoning.

Assuming that you are correct in your guesses, provide some sales and marketing advice to Big Daddy. What sort of pricing changes could Big Daddy implement to increase total revenue?

Format of your answers:

You should present your conclusions and suggestions to Big Daddy in the form of a memo. Remember when drafting the memo that Big Daddy is a busy business executive. Give him your suggestions, and explain your reasoning, succinctly and in as non-technical terms as possible. Attach an appendix that includes your completed data tables with the arc elasticities, along with a sample calculation showing how the elasticities were found. The appendix can also include any other background material you feel is relevant and include references to any external resources you may have consulted in preparing your report.

Extra Credit:

In addition to the price elasticity of demand, Chapter 3 discusses several other demand elasticities. Might any of these be relevant to this problem? Explain. If possible, suggest additional data that Junior could collect to add to this analysis and what findings you would expect (again, based on your knowledge of gasoline, milk and cookies).

Data for Good 1

Price

Quantity Demanded

Arc Elasticity

$2.00

280

-

$2.50

260

-0.3333

$3.00

240

-0.44

$3.50

220

-0.56521

$4.00

200

-0.7143

$4.50

180

-0.8947

Data for Good 2

Price

Quantity Demanded

Arc Elasticity

$2.00

230

-

$2.50

225

-0.0989

$3.00

220

-0.1236

$3.50

215

-0.1494

$4.00

210

-0.1765

$4.50

205

-0.2048

Data for Good 3

Price

Quantity Demanded

Arc Elasticity

$2.00

510

-

$2.50

413

-0.9458

$3.00

315

-1.4808

$3.50

218

-2.3659

$4.00

120

-4.3491

$4.50

23

-11.5315

*I was able to calculate all of the math (hopefully correct), but am having issues with the guesses; economics has always really stumped me and I seriously get confused about inelasticity and cpuld really use some help figuring that out. I'm also a little confused by what he means by memo, my professor is really vague most of the time.

1. Scarcity in economics means: we do not have sufficient resources to produce all the goods and services we want. the wants of people are limited. there must be poor people in rich countries. shortages exist in nearly all markets. You like to read Vogue and Sports Illustrated. You have only $5 to spend, so you only buy Sports Illustrated. The statement that best represents this economic concept is: resources are scarce. the real cost of something is what you must give up to get it. positive economics explains how the economy actually works. economic models are used to answer “what if” questions. . If the state government allocates additional spending on education, the opportunity cost is: zero. the dollar amount of the additional spending. considered only if additional taxes need to be raised to fund the spending. measured in terms of the best alternative use for that money. For a student that owns his or her own home and doesn't plan to live in the dorm the cost of going to college is: tuition and the cost of housing. tuition, the cost of housing, and the cost of books. tuition, the cost of books, and forgone income. forgone income only. Keynesian economics stressed: the importance of total spending. the self-correcting power of free markets. the long run. that the Depression should run its course to bring down the high cost of living. The economic policy that uses changes in government spending and taxes to affect the overall spending in the economy is known as: a tax-and-spend policy. monetary policy. fiscal policy. free-trade policy. When building a model, economists: simplify reality in order to highlight what really matters. attempt to duplicate reality in all of its complexity. ignore the facts and instead try to determine what the facts should be. are careful to avoid the scientific method. Which is a normative statement? The minimum wage has not kept pace with inflation. The minimum wage is an important tool in fighting poverty and should be increased. The minimum wage can create higher unemployment for teens and unskilled workers. A higher minimum wage is expected to increase the price of a fast-food cheeseburger. Which is an example of a positive statement? The poverty rate should be 4%. A high rate of economic growth is a more important economic goal than a low rate of unemployment. The federal government pays for 46% of U.S. health care costs. Everyone in the country should be covered by national health insurance. Economists may disagree about policies because they: may approach the issue using the same sets of values. may use different economic models. enjoy disagreeing with each other. only consider issues in positive economics.

1/ All the problems studied in economics arise from

a. the unequal distribution of income

b. the scarcity of resources

c. inappropriate government action

d. overpopulation

e. war

 

2/ The overall performance of the economic system as a whole is the focus of

a. macroeconomics

b. public economics

c. international finance

d. labor economics

e. microeconomics

 

3/ After graduating from high school, Steve had the following three choices for his immediate future, listed in order of preference: (1) attend our campus, (2) work in a printed circuit board factory, or (3) attend a rival college. His opportunity cost of going to college here includes which of the following?

a. The income he could have earned at the printed circuit board factory plus the direct cost of attending college here (tuition, textbooks, etc.)

b. The benefits he could have received from going to the rival college.

c. Only the tuition and fees paid for taking classes here.

d. Cannot be determined from the information given.

e. The cost of books and supplies at the rival college.

 

4/ The question of scarce resources and unlimited wants are addressed in

a. psychology

b. history

c. anthropology

d. political science

e. economics

 

5/ Consider an economic model designed to analyze the purchasing decisions of households. An assumption that a household chooses between only two goods would be an example of an

a. positive assumption

b. simplifying assumption

c. macroeconomic assumption

d. financial assumption

e. critical assumption

 

6/ Which of the following explains why economists may disagree over normative issues?

a. They have different beliefs and values.

b. They often employ different statistical techniques when examining data.

c. Some work only on microeconomic issues, while others focus exclusively on macroeconomic issues.

d. They examine the same data to draw their conclusions.

e. They need to disagree to publish their research findings.

 

7/ Suppose your friends take you out for dinner on your birthday, and you have a much better time than you would have had to do anything else. There is still an opportunity cost, even though they will not let you pay for anything. True/False

 

8/ Microeconomics

a. addresses scarcity from a global perspective

b. is purely theoretical and has little value in explaining real-world phenomena

c. focuses on what is happening in the economy as a whole

d. examines how individuals, households, and firms make economic decisions

e. answers the fundamental economic questions of how, when, where, and why.

 

9/ People and organizations have to make choices about how to allocate time and money because

a. religious values conflict with economics

b. time and money are both scarce

c. government require it

d. there are unlimited resources

e. corporations control our lives

 

10/ The objective of an economic model is to

a. yield a better understanding of important relationships

b. use simplifying assumptions to make positive economic statements

c. be an accurate description of reality

d. predict real-world occurrences with complete accuracy

e. use basic principles of economics to derive fundamental assumptions about human behavior.

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