Form, format, presentation, and
appearance are almost as important as correct numbers. Poor presentation, in
both written work (Word) and spreadsheets (Excel) is an indication of careless
thinking and analysis. You cannot earn full credit, even if the solutions are
correct, if your work is not presented in a professional manner.
All submitted written work should
include your name, the course number, and the title of the problem set. In
addition, remember that all conclusions must be supported. You should show the
steps you took to arrive at your conclusion. Numbers and calculations are not
self-explanatory. Your assignment should be “in good and proper form”
when submitted. That means, for example, when you prepare economic information,
your numbers must be aligned on the decimal and right justified. Use commas for
thousands. Use underlines and dollar signs appropriately. Every answer must be
properly labeled and supported with calculations in statement or schedule
(table) form, as you would do in a professional setting. Do not type formulas,
equations, and calculations or show math or equal signs. When finished, submit
your completed problems in one file (Word or Excel) for grading and instructor
feedback.
Word file: The cover page must include your name, course, date, unit
and assignment numbers, and problem number. Each problem must begin on a new
page with a hard page-break. If you use Word to prepare calculations, prepare
them in table form as if it were in Excel. Do not write anything past the
margins.
Excel file: The first tab is the cover page and must include your name, course, date, and the unit and assignment number. Each problem must be numb on a separate tab. Each tab must be properly labeled. Note that Excel is not actually required, but if you use Excel, you must use it correctly: one number in one cell, and each number (cell) properly labeled. Do not type formulas; instead, you must use Excel functions to calculate. Do not write anything past the margins. Use landscape page orientation if necessary.
PROBLEMS
Problem 1
Below is a production possibilities table for consumer goods
(food) and capital goods (machinery). Graph the data using Excel and then
answer the following questions.
|
|
A
|
B
|
C
|
D
|
E
|
F
|
|
FOOD
|
0
|
10
|
20
|
30
|
40
|
50
|
|
MACHINES
|
150
|
140
|
120
|
90
|
50
|
0
|
- What
are the specific assumptions that underlie the production possibilities curve?
- What
would be the cost of more food if the economy is at point C? What would be the
cost of producing more machinery? How does the shape of the production
possibilities curve reflect the law of increasing opportunity costs?
- What if
this hypothetical economy were producing only 9 food and 130 machines and
it was depicted by this production possibilities table and curve, what
conclusions could be drawn about this economy’s resource utilization?
- Can
this economy produce outside its current production possibilities? How can
technological changes affect the production possibilities curve? How can
international trade permit consumption above its production possibilities
curve?
Problem
2
Evaluate each of the supply and demand scenarios below,
answering the following questions:
- How will each affect
equilibrium price and equilibrium quantity in a competitive market?
- Will price and
quantity rise, fall, or be unchanged?
- Based on the
magnitudes of the shifts, will the answers be indeterminate?
Provide
an appropriate graph to illustrate each answer (this does not require use of
Excel, although you may use it).
- Demand decreases and supply is constant.
- Demand increases and supply increases.
- Supply decreases and demand is constant.
- Supply increases and demand decreases.
- Demand increases and supply decreases.
- Demand decreases and supply decreases.
- Demand increases and supply is constant.
Note
that ‘constant’ means with no shift while ‘increases’ or ‘decreases’ means a
shift occurs.
Problem 3
Suppose that the demand and supply schedules for rental apartments in the city
of Gotham are as given in the table below.
|
Rent
|
Demand
|
Supply
|
|
2,500.00
|
10000
|
15000
|
|
2,000.00
|
12500
|
12500
|
|
1,500.00
|
15000
|
10000
|
|
1,000.00
|
17500
|
7500
|
|
500.00
|
20000
|
5000
|
- What is the market equilibrium rental price
per month and the market equilibrium number of apartments demanded and
supplied?
- If the local government can enforce a
rent-control law that sets the maximum monthly rent at $1500, will there be a
surplus or a shortage? Of how many units? And how many units will actually be
rented each month?
- Suppose that a new government is elected that
wants to keep out the poor. It declares that the minimum rent that can be
charged is $2500 per month. If the government can enforce that price floor,
will there be a surplus or a shortage? Of how many units? And how many units
will actually be rented each month?
- Suppose that the government wishes to decrease
the market equilibrium monthly rent by increasing the supply the housing.
Assuming that demand remains unchanged, by how many units of housing would the
government have to increase the supply of housing in order to get the market
equilibrium rental price to fall to $1500 per month? To $1000 per month? To
$500 per month?
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