Tag: Economics – Others

Module One QuitAttempts ◻ Keep the Highest / 23. Agreement and disagreement among economists
Suppose that Paolo, an economist from a research facility in Washington, and Sharon, another economist from an investigative reporting group, are both guests on a popular science podcast. The host of the podcast is faciliating their debate over budget deficts. The following dialogue represents a portion of the transcript of their discussion:
Sharon:
Most people recognize that the budget deficit has been rising considerably over the last century. Wite need to find the best course of action to remedy this situation.
Paolo:
I believe that a cat in income tax rates would boost economic growth and raise tax revenue enough to reduce budget defles.
Sharon:
I actually feel that raising the top income tax rate would reduce the budget deficit more elfectively.
The disagreement between these economists is most likely due to q,Despite their differences, with which proposition are two economists chosen at random most likely to agree?
Business managers can raise profit more easily by reducing costs than by raising revenue.
Central banks should focus more on maintaining low unemployment than on maintaining low iffuction.
Employers should not be restricted from outsourcing work to foreign nations.

Andy and Chris work together at a bakery, making lemonade and iced tea. Andy can make 35 cups of lemonade per hour, 25 cups of iced tea per hour, or a combination of both. Chris can make 16 cups of lemonade per hour, 20 cups of iced tea per hour, or a combination of both. Fill in the blanks for the statements below. If your answer is a number, put it as a decimal. For example, if your answer is 4/3, you should put 1.33. If your answer is a name, spell it exactly as above.
Andy’s opportunity cost of 1 cup of lemonade is ____ cups of iced tea.
Andy’s opportunity cost of 1 cup of iced tea is ____ cups of lemonade.
Chris’s opportunity cost of 1 cup of lemonade is ____ cups of iced tea.
Chris’s opportunity cost of 1 cup of iced tea is ____ cups of lemonade.
____ has the absolute advantage in making lemonade.
____ has the absolute advantage in making iced tea.
____has the comparative advantage in making lemonade.
____has the comparative advantage in making iced tea.
Suppose Andy and Chris are not specialized. Andy is making 21 cups of lemonade and 10 cups of iced tea per hour. Chris is making 12 cups of lemonade and 5 cups of iced tea per hour. If Andy and Chris fully specialize, they will all together make ____ more cups of lemonade per hour and ____ more cups of iced tea per hour.

Why do firms offer efficiency wages? (a) In order to Increase the number of employees (b) In order to cause involuntary unemployment (e) In order to pay employees a higher wage so they are not indifferent about leaving the firm (d) All are reasons firms offer efficiency wages
The AD curve is a function of (a) Expected Inflation (b) Oil Prices (c) Consumption Behavior (d) All of above
Money demand is a function of (a) the risk free interest rate (b) income (e) financial risk (d) All of the above
The labor demand curve would be upward sloping if (a) there was decreasing marginal product of labor. (b) there was increasing marginal product of capital. (c) there was increasing marginal product of labor. (d) there was constant marginal products of labor and capital.
TRUE or FALSE: Investment always equals Savings in the Classical Model? (a) True. (b) False.
TRUE or FALSE: When the LM curve shifts the AD curve always shifts as well. (a) True. (b) False
TRUE OR FALSE: When the IS curve shifts the AD curve always shifts in the same direction. (a) True. (b) False
TRUE or FALSE: Wages (IP) is a nominal variable in our AS/AD model. (a) True. (b) False
TRUE or FALSE: endogenous capital implies that LRAS is a function of Is. (a) True (b) False

As the GATT and WTO have evolved, the trade rounds have become:
Stayed about the same in length of negotiating time
Shorter in length of negotiating time
Longer in length of negotiating time
Flag question: Question 3 — 0.1 pts
The WTO seeks to promote economic stability and prevent crises; to help resolve crises when they do occur; to promote growth and alleviate poverty; and monitor national monetary systems (surveillance).
True
False
Flag question: Question 4 — 0.1 pts
Some of the harshest critics of organizations such as the WTO, IMF, and World Bank have been Europeans, Wall Street and Neoliberals.
True
False
Flag question: Question 5 — 0.1 pts
Which of the following organizations is an IGO dealing with trade?
ITU
IAEA
WTO
IMF
Flag question: Question 6 — 0.1 pts
Congress approved GATT in 1947.
True
False
Flag question: Question 7 — 0.1 pts
The IMF is essentially the central bank to the world, with a managing director who is always a European.
True
False
Flag question: Question 8 — 0.1 pts
The IMF lends money on a short term basis to stabilize a country’s economy, but it does so with requirements called

20a.
Each member of the Board of Governors of the Federal Reserve System is selected by:
a. the U.S. president and confirmed by the Senate.
b. the Supreme Court and confirmed by the Senate.
c. the U.S. president and confirmed by the Supreme Court.
d. the Chairman of the Banking Committee and confirmed by the Senate.
b.
The Board of Governors of the Federal Reserve System:
is the largest bank in the United States.
coordinates policies for the 12 Federal Reserve Banks.
is made up of five members.
is replaced every 2 years.
c.
The Federal Open Market Committee (FOMC) includes:
the Chairman of the Federal Reserve Board of Governors and 7 of the 12 presidents of the Federal Reserve Banks, of which the president of the New York Fed has a permanent voting seat.
members of the Board of Governors and 5 of the 12 presidents of the Federal Reserve Banks, of which the Chairman of the Federal Reserve Board of Governors has a permanent voting seat.
members of the Board of Governors and 5 of the 12 presidents of the Federal Reserve Banks, of which the president of the New York Fed has a permanent voting seat.
members of the Board of Governors, 7 of the 12 presidents of the Federal Reserve Banks, and the president of the United States.

ECON 3021
1.
Suppose a consumer views two goods, X and Y, as perfect complements. Her utility function is given by U = MIN [2X, Y]. Sketch the graph of the consumers indifference curve that goes through the bundle X = 7 and Y = 8. Put the amount of Y on the vertical axis, and the amount of X on the horizontal axis. Which of the three assumptions that we made about consumer preferences is violated in this case?
2.
Suppose a consumer has $250 to spend on two goods, Good X and Good Y. The price of Good X is given by Px = $10. The price of Good Y is given by Py = $25. Graph the consumer’s budget constraint. Please put the quantity of Good X on the horizontal axis, and the quantity of Good Y on the vertical axis. Be sure to label your graph carefully and accurately. What is the slope of the budget constraint?
3.
Suppose a consumer’s preferences can be represented by the utility function U(X,Y) = XY. In the table below, identify 4 points on the consumer’s indifference curve where U = 100.
4.
Suppose a consumer’s preferences can be represented by the utility function U(X, Y) = Min (2X,Y). Also, suppose the consumer has $300 to spend and the price of Good X is PX = $2 and the price of Good Y is PY = $5.

John wants to buy a certain type of used car. Paula owns this type of used car. Paula claims that her car is in excellent condition. She knows the real condition of her used car. Her car is not in good condition.John does not know automobile mechanics and thus does not know whether Paula’s car is in excellent condition.John is willing to buy a used car in good condition at $21,000 and a used car in less than good condition at $11,000.Paula makes an offer to John for $17,000. Since her car is in less-than-good condition, she would be willing to sell it to John or anybody else for $10,000.Assume the probability of buying a good car in the used car market is 50%, and, therefore, the probability of buying a bad car is 50%.
Is this situation an adverse selection problem or a moral hazard problem or both? Explain your answer. (15 points)
Will John accept Paula’s offer ( $17,000 )? Explain your answer. ( 25 points)
What is the maximum price at which John would buy Paula’s car? Explain your answer. ( 20 points)
Identify two ways to reduce the information asymmetry between John and Paula regarding the real condition of the car. Explain your answer. (15 points)

You produce widgets for sale in a perfectly competitive market at a market price of $10 per widget. Your widgets are manufactured in two plants, one in Massachusetts and the other in Connecticut. Due to changes in the labor market in Connecticut, you are forced to raise wages there, so that marginal costs in that plant increase. In response to this, should you shift production and produce more in your Massachusetts plant?
Part 2
Due to the higher marginal cost of production at the Connecticut plant, you should
Part 3
not change production at either plant.
not shift production to the Massachusetts plant, but you should reduce production in the Connecticut plant until that plant’s marginal cost of production equals price.
not shift production to the Massachusetts plant, but you should increase production in the Connecticut plant until that plant’s marginal cost of production equals marginal revenue.
increase production at the Massachusetts plant until the marginal revenue of the total amount produced is equal to the marginal cost of production there.
shift production to the Massachusetts plant until the marginal cost of production at the two plants is equal.

Technological efficiency isA) a necessary and sufficient condition for profit maximization.B) a sufficient but not necessary condition for profit maximization.C) a necessary but not sufficient condition for profit maximization.D) a theoretical construct with little connection to the real world.
A) a necessary and sufficient condition for profit maximization.
B) a sufficient but not necessary condition for profit maximization.
C) a necessary but not sufficient condition for profit maximization.
D) a theoretical construct with little connection to the real world.
Multiple Choice 10 points
A production function tells the firmA) the maximum it can expect to produce with a given mix of inputs.B) the average it can expect to produce with a given mix of inputs.C) the minimum it can expect to produce with a given mix of inputs.D) the average level of production for other firms in the industry.
A) the maximum it can expect to produce with a given mix of inputs.
B) the average it can expect to produce with a given mix of inputs.
C) the minimum it can expect to produce with a given mix of inputs.
D) the average level of production for other firms in the industry.
Multiple Choice 10 points
With respect to production, the short run is best defined as a time period.A) lasting about six months.B) lasting about two years.C) in which all inputs are foxed.D) in which at least one input is fixed.
A) lasting about six months.
B) lasting about two years.
C) in which all inputs are foxed.
D) in which at least one input is fixed.
4Multiple Choice 10 points
The Average Product of Labor isA) the change in total product resulting from an extra unit of labor, holding other factors constant.B) the ratio of output to the number of workers used to produce that output.C) the amount of output that can be produced by a given amount of labor.D) equal to the marginal product of labor when the average product is increasing:
A) the change in total product resulting from an extra unit of labor, holding other factors constant.
B) the ratio of output to the number of workers used to produce that output.
C) the amount of output that can be produced by a given amount of labor.
D) equal to the marginal product of labor when the average product is increasing.

Match the following explanations of terms and concepts appropriately.
Government regulation aimed at improving health and safety
Government regulation of natural monopoly aimed at controlling the price, output, entry of new firms, and quality of service in industries in which monopoly appears inevitable or even desirable
The regulatory dilemma
Clayton Act
Government regulation aimed at preventing monopoly and fostering competition; outlaws attempts to monopolize or cartelize markets in which competition is desirable
The Celler-Kefauver Act
Sherman Antitrust Act of 1890
Unregulated profit: This concept pertains to the output rate maximization where marginal cost equals marginal revenue. The problem is that the resulting price-output combination is inefficient in terms of social welfare: the marginal value of additional output exceeds its marginal cost, so social welfare would increase if output expanded.
Antitrust policy
Federal Trade Commission Act of 1914
Regulated profit maximization: This is whether to set price equal to marginal cost, which is socially optimal but requires a subsidy, or to set a break-even price even though output then falls short of the socially optimal level.
Social regulation
Economic regulation