exercises1

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1.The demand and supply schedules for gum are:a)Draw a graph of the market for gum and mark in the equilibrium price and quantity.b)Suppose that the price of gum is 70 cents a pack. Describe the situation in the gum marketand explain how the price adjusts.c)Suppose that the price of gum is 30 cents a pack. Describe the situation in the gum marketand explain how the price adjusts.d) A fire destroys some factories that produce gum and the quantity of gum supplied decreasesby 40 million packs a week at each price. Explain what happens in the market for gum anddraw a graph to illustrate the changes.e) A fire destroys some factories that produce gum and the quantity of gum supplied decreasesby 40 million packs a week at each price. If at the time the fire occurs there is an increase in the teenage population, which increases the quantity of gum demanded by 40 million packsa week at each price, what is the new equilibrium price and quantity of gum? Illustrate thesechanges on your graph.2.The money price of a textbook is 90 € and the money price of the Wii game Super Mario Galaxyis 45 €. What is the opportunity cost of a textbook in terms of the Wii game? What is the relative price of the Wii game in terms of textbooks?3.Classify the following pairs of goods and services as substitutes in production, complements inproduction or neither:a)Bottled water and health club membershipsb)French fries and baked potatoesc)Leather purses and leather shoesd)Hybrids and SUVse)Diet coke and regular coke4.Brazil produces ethanol from sugar and the land used to grow sugar can be used to grow foodcro ps. Suppose that Brazil´s production possibilities for ethanol and food crops are as follows:a)Draw a graph of Brazil´s PPF and explain how your graph illustrates scarcity.b)If Brazil produces 40 barrels of ethanol a day, how much food must it produce to achieveproduction efficiency?c)Why does Brazil face a tradeoff on its PPF?d)If Brazil increases its production of food crops from 2 tons per day to 3 tons per day, what isthe opportunity cost of the additional food?e)Define marginal cost and calculate Brazil´s marginal cost of producing a ton of food when thequantity produced is 2.5 tons per day.e the following relationship in grapha)Calculate the slope at point A and at point B.b)Calculate the slope across the arc AB. 9 8 7 6 5 4 3 2 16.Think about the demand for the three game consoles: Xbox, PS4, and Wii. Explain the effect ofthe following events on the demand for Xbox games and the quantity of Xbox games, other things remaining the same:a)The price of an Xbox falls.b)The prices of a PS4 and a Wii fall.c)The number of people writing and producing Xbox games increases.d)Consumers´ incomes increase.e)Programmers who write code of Xbox games become more costly to hire.f)The expected future price of an Xbox game falls.g)A new game console that is a close substitute for Xbox comes onto the market.7.The demand and supply schedules for potato chips are:a)Draw a graph of the potato chip market and mark in the equilibrium price and quantity.b)If the price is 60 cents a bag, describe the situation in the potato chips market and explainhow the price adjusts.c)If the price is 90 cents a bag, describe the situation in the potato chips market and explainhow the price adjusts.d) A new dip increases the quantity of potato chips that people want to buy by 30 million bagsper week at each price. Does the demand for chips change? Does the supply for chipschange? Describe the change. How do the equilibrium price and equilibrium quantity ofchips change?e)If the virus destroys potato crops and the quantity of potato chips produced decreases by 40million bags a week at each price. How does the supply of chips change? If the virus hits just as the new dip comes onto the market, how do the equilibrium price and equilibriumquantity of chips change?8.In an hour, Sue can produce 40 caps or 4 jackets and Tessa can produce 80 caps or 4 jackets.a)Calculate Sue´s opportunity cost of producing a cap.b)Calculate Tessa´s opportunity cost of producing a cap.c)Who has a comparative advantage in producing cap?d)If Sue and Tessa specialize in producing the good in which each of them has a comparativeadvantage, and they trade 1 jacket for 15 caps, who gains from the specialization and trade?e) Suppose that Tessa buys a new machine for making jackets that enables her to make 20jackets and hour. (She can still make only 80 caps per hour.) Who now has a comparative advantage in producing jackets? Can Sue and Tessa still gain from trade? Would Sue and Tessa still be willing to trade 1 jacket for 15 caps? Explain your answer.9. Using the following data from the table, draw a graph that shows the relationship between thetwo variables x and y.a) Is the relationship positive or negative?b) Does the slope of the relationship become steeper or flatter as the value of x increases? c) Think of some economic relationships that might be similar to this one. d) Calculate the slope of the relationship between x and y when x equals 3.e) Calculate the slope of the relationship across the arc as x increase from 4 to 5.10. Use the following relationship in graphc) Calculate the slope at point A and at point B.d) Calculate the slope across the arc AB.11. Use the following functions to calculate equilibrium price and equilibrium quantity.Q d = 150 – 2p Q s = 60 + pa) Draw a graph with market equilibrium.b) Government regulatory will increase the price of product by 50%. Calculate the new marketequilibrium and explain this market situation.98 7 6 5 4 3 2 1。