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ECON 545 Business Economics Course Week 2 Project part 1 Complete Answer

ECON-545-Business Economics_Course _Week 2_Project part1_A+_Answer

ECON-545-Business Economics_Course _Week 2_Project part1_A+_Answer

Course Project – Part 1
This course contains two project assignments — Project Part 1 in Week 2, and Project Part 2 in Week 5. Because of this, you will need to spend additional time and effort in Weeks 2 and Week 5.
Overview

Project Part 1 (PP1)
Project Part 1 (PP1) consists of performing application-oriented exercises wherein the specific economic principles learned in this course are put to practical use. You must translate your ideas into economic analysis using the specific economic theory and economic terms contained in the TCOs covered in the course, and demonstrate that you are understanding and utilizing material from text chapters covered up to this point in the course, to receive full credit on the assignment.
You are being asked to submit a report containing responses to three exercises. Exercise 1 entails a choice of one topical microeconomic issue out of two possible alternatives. Exercises 2 and 3 entail a choice of two textbook questions out of a list of possible alternatives.
Exercise 1

Choose one of the following two microeconomic issues:
1. Everyone’s Gasoline Problem. We are all familiar with fluctuating prices of gasoline at the pump. Why does this happen? Research the recent history of gasoline pricing in your area, and attempt to relate any fluctuations you observe to documented supply and demand factors, as outlined in our book. Be sure to cite any references used.
2. Ethical Issues in Business. It seems that every day lately we are confronted with a new company that has acted at least unethically and possibly illegally in the operation and financial reporting of their company’s business dealings? Briefly discuss one of these issues and then see if you can relate the issue to ANY of our TCOs. That is, are there any effects on demand or on supply related to this topic? How would you expect this to affect the equilibrium price and equilibrium quantity for this company’s products and services? Is the elasticity of demand or supply affected? What about the effect on production levels and costs? Are ethical issues more likely to occur in one market type rather than another market type? You don’t have to cover all of these topics. I’ve just suggested some possible connections to our TCOs. Any connection to our TCOs is fine here.
Exercises 2 and 3

Select any two out of the following questions from the text:
• Chapter 3, Question 14
• Chapter 3, Question 15
• Chapter 5, Question 17
• Chapter 5, Question 18
• Chapter 7, Question 15
• Chapter 8, Question 11
• Chapter 8, Question 14

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ECON 545 Business Economics Course Week 6 Monetary and Fiscal Policy You Decide Answer

ECON 545 Business Economics Course Week 6 Monetary and Fiscal Policy You Decide Answer

ECON545 – Week 6 You Decide Transcript

The U.S. economy has fallen into a recession. It is a severe and deep recession, and one that
some economic analysts say may persist for at least another year. The unemployment rate has
risen to levels not seen in over 20 years. The current unemployment rate is at 8% and is
expected to rise further. The inflation rate is -2.4 percent, meaning that overall, prices are falling.

Your Role
You are the new senior economic advisor to the President of the United States, and he has
asked for your recommendation on how to proceed. Since you are an experienced Washington
consultant, you know that you should first consult several other experts and get their advice.
The following colleagues have expressed their insights and recommendations.

Keyplayers
Keyplayers Text for Audio Recording
Raymond Burke,
Economic Consultant

Kathy Lee, Former
Economic Advisor to
the President

Patricia Lopez,
Consultant to the
Federal Reserve

Allison Tanney,
Economic Consultant

Well, first we have to distinguish between fiscal policy and monetary
policy. As you know, the President does have some control over fiscal
policy, along with Congress of course – but concerning monetary
policy, only the Federal Reserve Bank can determine and execute
monetary policy.

I would recommend that the President lowers interest rates further to
help businesses and consumers get back on their feet.
I think the President should consider raising taxes and reducing
government spending. This will help correct the budget deficit problem
and help the economy get rolling again.
People will respect this tough decision and once they see that the
economy is improving, they will not mind the tax increase as much.
I’ll just comment on Fed Policy, as that was my background and
expertise. As you know, the Fed has three tools with which to address
stability and the growth of our economy. They control the discount rate
and federal funds rate, open market operations, and the bank reserve
requirement.
I think the Fed should leave interest rates alone, but strongly sell
bonds and raise the bank reserve requirement. This will increase the
money supply and allow banks to be more stable if they hang on to a
greater percentage of their customers’ deposits.
As I see it, we need both expansionary fiscal policy and expansionary
monetary policy. The President should work with Congress to increase
government spending and lower taxes.

As far as monetary policy is concerned, the Federal Reserve Board
needs to increase the money supply by buying bonds, raising interest
rates, and if necessary, raising the reserve requirement.

Activity
Your task is to take this advice and produce your own recommendation to the President. Do not
simply choose one person’s advice, but pick and choose from each recommendation that you
receive. Be sure to list what you believe and why you believe it is sound advice from each of
your colleagues, and also what you disagree with, and why you disagree with your
colleagues. Then, produce a consolidated recommendation of your own.

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ECON-545- Business Economics_Course Week 8 Final Exam_Answer_ALL Sets

ECON-545- Business Economics_Course Week 8 Final Exam_Answer_ALL Sets

ECON-545- Business Economics_Course Week 8 Final Exam_Answer_ALL Sets

1. Question :(TCO A) Suppose you are hired to manage a small manufacturing facility that produces Widgets.

(a.) (15 points) You know from data collected on the Widget Market that market demand and market supply have both increased recently. As manager of the facility, what decisions should you make regarding production levels and pricing for your Widget facility?

Remember that supply and demand are about the market supply and market demand, which is bigger than your own company. You are being given data on supply and demand for the whole market and are being asked what effect that has on you as a small part of that market.

(b.) (15 points) Now, suppose that following the supply and demand changes in (a), a substitute good goes up in price, and your costs of production increase. What new decisions will you make regarding production levels and pricing for your Widget facility?
(TCO B) Here is some data on the demand for marshmallows:

Price Quantity
$10 100
$ 8 300
$ 6 700
$ 4 1300
$ 2 2200

(a.) (15 points) Is demand elastic or inelastic in the $6-$8 price range? How do you know?

(b.) (15 points) If the table represents the demand faced by a monopoly firm, then what is that firm’s marginal revenue as it increases output from 1300 units to 2200 units? Show all work. (Be careful here!)
3. Question : (TCO C) You have been hired to manage a small manufacturing facility whose cost and production data are given in the table below.
Total Total
Workers Labor Cost Output Revenue
1 $500 100 $700
2 1000 280 1150
3 1500 440 1440
4 2000 540 1570
5 2500 600 1670
6 3000 630 1710
7 3500 640 1730

(a.) (6 points) What is the marginal product of the second worker?

(b.) (6 points) What is the marginal revenue product of the fourth worker?

(c.) (6 points) What is the marginal cost of the first worker?

(d.) (12 points) Based on your knowledge of marginal analysis, how many workers should you hire? Explain you answer.

4. Question : (TCO C) Answer the next questions on the basis of the following cost data for a firm in pure competition:

OUTPUT —— TFC ———- TVC
0 $100.00 0.00
1 100.00 70.00
2 100.00 120.00
3 100.00 150.00
4 100.00 200.00
5 100.00 270.00
6 100.00 360.00

(a.) (15 points) Refer to the above data. If the product price is $45 at its optimal output, will the firm realize an economic profit, break even, or incur an economic loss? How much will the profit or loss be? Show all calculations.

(b.) (15 points) Refer to the above data. If the product price is $75 at its optimal output, will the firm realize an economic profit, break even, or incur an economic loss? How much will the profit or loss be? Show all calculations.

5. Question : (TCO D) A software producer has fixed costs of $18,000 per month and her Total Variable Costs (TVC) as a function of output Q are given below:

Q TVC Price
1,000 $15,000 $25
2,000 20,000 24
3,000 30,000 23
4,000 50,000 22
5,000 80,000 20
(a.) (15 points) If software can only be produced in the quantities above, what should be the production level if the producer operates in a monopolistic competitive market where the price of software at each possible quantity is also listed above? Why? (Show all work).

(b.) (15 points) What should be the production level if fixed costs rose to $48,000 per month? Explain.
6. Question : (TCO F)

(a.) (20 points) Suppose nominal GDP in 1999 was $200 billion, and in 2001, it was $270 billion. The general price index in 1999 was 100 and in 2001 it was 150. Between 1999 and 2001, the real GDP rose by what percent?

(b.) Use the following scenario to answer questions (b1) and (b2).
In a given year in the United States, the total number of residents is 270 million, the number of residents under the age of 16 is 38 million, the number of institutionalized adults is 15 million, the number of adults who are not looking for work is 17 million, and the number of unemployed is 10 million.

(b1.) (5 points) Refer to the data in the above scenario. What is the size of the labor force in the United States for the given year?

(b2.) (5 points) Refer to the data in the above scenario. What is the unemployment rate in the United States for the given year?
7. Question : (TCO G and H)

(a.) (15 points) Suppose your local Congress representative suggests that the federal government intervenes in the gasoline market to stop runaway price increases. Would you say that this view basically supports the Keynesian or the Monetarist school of thought? Why? What position would the opposing school of thought take on this issue? (Be brief — you can answer this in 2 or 3 brief paragraphs).

(b.) (10 points) Any change in the economy’s total expenditures would be expected to translate into a change in GDP that was larger than the initial change in spending. This phenomenon is known as the multiplier effect. Explain how the multiplier effect works.

(c.) (15 points) You are told that 90 cents out of every extra dollar pumped into the economy goes toward consumption (as opposed to saving). Estimate the GDP impact of a positive change in government spending that equals $20 billion.

8. Question : (TCO G)
(a.) (20 points) Third National Bank is fully loaned up with reserves of $20,000 and demand deposits equal to $100,000. The reserve ratio is 20%. Households deposit $5,000 in currency into the bank. How much excess reserves does the bank now have, and what is the maximum amount of new money that can be created in the banking system as a result of this deposit? Show all work.

(b.) (20 points) What is the discount rate in the banking system? Explain how the Fed manipulates this rate to achieve macroeconomic objectives.
9. Question : (TCO E and I) Let the exchange rate be defined as the number of dollars per British pound. Assume there is a decrease in U.S. interest rates relative to that of Britain.

(a.) (10 points) Would this event cause the demand for the dollar to increase or decrease relative to the demand for the pound? Why?

(b.) (10 points) Has the dollar appreciated or depreciated in value relative to the pound?

(c.) (10 points) Does this change in the value of the dollar make imports cheaper or more expensive for Americans? Are American exports cheaper or more expensive for importers of U.S. goods in Great Britain? Illustrate by showing the price of a U.S. cell phone in Britain before and after the change in the exchange rate.

(d.) (10 points) If you had a business exporting goods to Britain, and U.S. interest rates fell as they have in this example, would you plan to expand production or cut back? Why?

Set 1 Additional Questions:

Question 2. (TCO B) Suppose the governor of California has proposed increasing toll rates on California’s toll roads, and has presented two possible scenarios to implement these increases. Following are projected data for the two scenarios for the California toll roads:
Scenario 1: Toll rate in 2012: $10.00. Toll rate in 2016: $22.50
For every 100 cars using the toll roads in 2012, only 81.6 cars will use the toll roads in 2016.
Scenario 2:
Toll rate in 2012: $10.00. Toll rate in 2016: $17.50
For every 100 cars using the toll roads in 2012, only 96.2 cars will use the toll roads in 2016.
a. Using the midpoint formula, calculate the price elasticity of demand for Scenario 1 and Scenario 2. (10 points)
b. Assume 10,000 cars use California toll roads every day in 2012. What would be the daily total revenue received for each scenario in 2012 and in 2016? (6 points)
c. Is demand under Scenario 1 and under Scenario 2 price elastic, inelastic, or unit elastic. Briefly explain. (4 points)
(Points : 30)

Question 3. 3. (TCO C) You have been hired to manage a small manufacturing facility whose cost and production data are given in the table below.
Total Total
Workers Labor Cost Output Revenue
1 $500 100 $700
2 1000 280 1150
3 1500 440 1440
4 2000 540 1570
5 2500 600 1670
6 3000 630 1710
7 3500 640 1730

(a.) (6 points) What is the marginal product of the second worker?

(b.) (6 points) What is the marginal revenue product of the fourth worker?

(c.) (6 points) What is the marginal cost of the first worker?

(d.) (12 points) Based on your knowledge of marginal analysis, how many workers should you hire? Explain you answer.
(Points : 30)

Question 4. 4. (TCO C) Answer the next questions (Parts A and B) on the basis of the following cost data for a firm operating in pure competition:

OUTPUT —— TFC ———- TVC
0 $500.00 0.00
1 500.00 70.00
2 500.00 130.00
3 500.00 170.00
4 500.00 200.00
5 500.00 300.00
6 500.00 510.00

(a.) (15 points) Refer to the above data. If the product price is $185 at its optimal output, will the firm realize an economic profit, break even, or incur an economic loss? How much will the profit or loss be? Show all calculations.

(b.) (15 points) Refer to the above data. If the product price is $200 at its optimal output, will the firm realize an economic profit, break even, or incur an economic loss? How much will the profit or loss be? Show all calculations. (Points : 30)

Question 5. 5. (TCO D) A software producer has fixed costs of $20,000 per month and her Total Variable Costs (TVC) as a function of output Q are given below. Complete the table (TC, MC, TR, and MR), then answer Parts A and B.

Q TVC Price
2,000 $5,000 $25
4,000 7,000 22
6,000 18,000 20
8,000 33,000 10
10,000 50,000 1
(a.) (15 points) If software can only be produced in the quantities above, what should be the production level if the producer operates in a monopolistic competitive market where the price of software at each possible quantity is also listed above? Why? (Show all work.)
(b.) (15 points) What should be the production level if fixed costs rose to $70,000 per month? Explain.
(Points : 30)

Question 6. 6. (TCO F)

(a.) (20 points) Suppose nominal GDP in 1999 was $200 billion, and in 2001, it was $270 billion. The general price index in 1999 was 100 and in 2001 it was 150. Between 1999 and 2001, the real GDP rose by what percent?

(b.) Use the following scenario to answer questions (b1) and (b2).
In a given year in the United States, the total number of residents is 270 million, the number of residents under the age of 16 is 38 million, the number of institutionalized adults is 15 million, the number of adults who are not looking for work is 17 million, and the number of unemployed is 10 million.

(b1.) (5 points) Refer to the data in the above scenario. What is the size of the labor force in the United States for the given year?

(b2.) (5 points) Refer to the data in the above scenario. What is the unemployment rate in the United States for the given year? (Points : 30)

Question 7. 7. (TCO G and H)

(a.) (15 points) What are the arguments for and against the use of fiscal policy to fight inflation, lower unemployment, and raise GDP (Keynesian and Monetarist)?

(b.) (10 points) Any change in the economy’s total expenditures would be expected to translate into a change in GDP that was larger than the initial change in spending. This phenomenon is known as the multiplier effect. Explain how the multiplier effect works.

(c.) (15 points) You are told that 80 cents out of every extra dollar pumped into the economy goes toward consumption (as opposed to saving). Estimate the GDP impact of a positive change in government spending that equals $10 billion. (Points : 40)

Question 8. 8. (TCO G)

(a.) Reserve requirement for banks is set at 5%. Your firm withdraws $42,000 on its line of credit at the Security Bank to purchase equipment for expansion. The equipment vendor deposits the amount that he receives from you at his bank, The Highland Bank.

(10 points) By how much has each bank’s excess reserves changed as a result of your withdrawal and expenditure?

(10 points) What is the maximum amount of new money that can be created in the banking system as a result of your purchase? Show all work.

(b.) (10 points) Suppose that the Security Bank discovers its reserves will temporarily fall slightly short of those legally required. How might it remedy this situation through the Federal Funds market?

(10 points) Explain how the Fed manipulates the Federal Funds Rate in order to achieve macroeconomic objectives.
(Points : 40)

Question 9. 9. (TCO E and I) Let the exchange rate be defined as the number of dollars per Japanese yen. Assume that there is a decrease in U.S. interest rates relative to that of Japan.

(a.) (10 points) Would this event cause the demand for the dollar to increase or decrease relative to the demand for the yen? Why?

(b.) (10 points) Has the dollar appreciated or depreciated in value relative to the yen?

(c.) (10 points) Does this change in the value of the dollar make imports cheaper or more expensive for Americans? Are American exports cheaper or more expensive for importers of U.S. goods in Japan? Illustrate by showing the price of a U.S. e-reader in Japan before and after the change in the exchange rate.

(d.) (10 points) If you had a business exporting goods to Japan, and U.S. interest rates fell as they have in this example, would you plan to expand production or cut back? Why? (Points : 40)

Set 2

1. (TCO A) Suppose you are hired to manage a small manufacturing facility that produces Widgets.

(a.) (15 points) You know from data collected on the Widget Market that market demand has recently increased and market supply has recently decreased. As manager of the facility, what decisions should you make regarding production levels and pricing for your Widget facility?

Remember that supply and demand are about the market supply and market demand, which is bigger than your own company. You are being given data on supply and demand for the whole market and are being asked what effect that has on you as a small part of that market.

(b.) (15 points) Now, suppose that following the supply and demand changes in (a), a substitute good goes up in price, and your costs of production decrease. What new decisions will you make regarding production levels and pricing for your Widget facility? (Points : 30)

2. (TCO B) Here is some data on the demand for lettuce:

Price Quantity
$10 100
$ 8 120
$ 6 140
$ 4 160
$ 2 180

(a.) (15 points) Is demand elastic or inelastic in the $6-$8 price range? How do you know?

(b.) (15 points) If the table represents the demand faced by a monopoly firm, then what is that firm’s marginal revenue as it increases output from 160 units to 180 units? Show all work. (Be careful here!) (Points : 30)
. (TCO C) You have been hired to manage a small manufacturing facility whose cost and production data are given in the table below.

Total Total
Workers Labor Cost Output Revenue
1 $200 50 $350
2 400 140 675
3 600 220 1120
4 800 270 1570
5 1000 300 1865
6 1200 315 2070
7 1400 320 2170

(a.) (6 points) What is the marginal product of the second worker?

(b.) (6 points) What is the marginal revenue product of the fourth worker?

(c.) (6 points) What is the marginal cost of the first worker?

(d.) (12 points) Based on your knowledge of marginal analysis, how many workers should you hire? Explain you answer. (Points : 30)
4. (TCO C) John operates a small business out of his home and has very little in terms of fixed costs. Answer the next questions (Parts A and B) on the basis of the following cost data for John’s firm operating in pure competition:

OUTPUT —— TFC ———- TVC
0 $30.00 0.00
1 30.00 70.00
2 30.00 120.00
3 30.00 150.00
4 30.00 200.00
5 30.00 270.00
6 30.00 360.00

(a.) (15 points) Refer to the above data. If the product price is $60, at its optimal output, will the firm realize an economic profit, break even, or incur an economic loss? How much will the profit or loss be? Show all calculations.

(b.) (15 points) Refer to the above data. If the product price is $55 at its optimal output, will the firm realize an economic profit, break even, or incur an economic loss? How much will the profit or loss be? Show all calculations. (Points : 30)
5. (TCO D) A software producer has fixed costs of $30,000 per month and her Total Variable Costs (TVC) as a function of output Q are given below:

Q TVC Price
3,000 $ 5,000 $5
13,000 25,000 4
23,000 50,000 3
33,000 80,000 2
43,000 120,000 1
(a.) (15 points) If software can only be produced in the quantities above, what should be the production level if the producer operates in a monopolistic competitive market where the price of software at each possible quantity is also listed above? Why? (Show all work.)
(b.) (15 points) What should be the production level if fixed costs rose to $50,000 per month? Explain.
6. (TCO F)

(a.) (20 points) Suppose nominal GDP in 1999 was $200 billion, and in 2001, it was $270 billion. The general price index in 1999 was 100 and in 2001 it was 150. Between 1999 and 2001, the real GDP rose by what percent?

(b.) Use the following scenario to answer questions (b1) and (b2).
In a given year in the United States, the total number of residents is 270 million, the number of residents under the age of 16 is 38 million, the number of institutionalized adults is 15 million, the number of adults who are not looking for work is 17 million, and the number of unemployed is 10 million.

(b1.) (5 points) Refer to the data in the above scenario. What is the size of the labor force in the United States for the given year?

(b2.) (5 points) Refer to the data in the above scenario. What is the unemployment rate in the United States for the given year? (Points : 30)
7. (TCO G and H)

(a.) (15 points) Suppose your local Congress representative suggests that the federal government intervenes in the gasoline market to stop runaway price increases. Would you say that this view basically supports the Keynesian or the Monetarist school of thought? Why? What position would the opposing school of thought take on this issue? (Be brief — you can answer this in 2 or 3 brief paragraphs).

(b.) (10 points) Any change in the economy’s total expenditures would be expected to translate into a change in GDP that was larger than the initial change in spending. This phenomenon is known as the multiplier effect. Explain how the multiplier effect works.

(c.) (15 points) You are told that 90 cents out of every extra dollar pumped into the economy goes toward consumption (as opposed to saving). Estimate the GDP impact of a positive change in government spending that equals $20 billion.
(Points : 40)
8. (TCO G)

(a.) Reserve requirement for banks is set at 5%. Your firm deposits its profits of $28,000 into the Third National Bank.

(10 points) How much excess reserve does your deposit generate for the bank?

(10 points) What is the maximum amount of new money that can be created in the banking system as a result of this deposit? Show all work.

(b.) (10 points) What is the Federal Funds Rate in the banking system?

(10 points) Explain how the Fed manipulates this rate in order to achieve macroeconomic objectives. (Points : 40)

9. (TCOs E and I) Let the exchange rate be defined as the number of dollars per Japanese yen. Assume that there is a relatively lower rate of inflation in the U.S. relative to that of Japan.

(a.) (10 points) Would this event cause the demand for the dollar to increase or decrease relative to the demand for the yen? Why?

(b.) (10 points) Has the dollar appreciated or depreciated in value relative to the yen?

(c.) (10 points) Does this change in the value of the dollar make imports cheaper or more expensive for Americans? Are American exports cheaper or more expensive for importers of U.S. goods in Japan? Illustrate by showing the price of a U.S. e-reader in Japan, before and after the change in the exchange rate.

(d.) (10 points) If you had a business exporting goods to Japan, and U.S. inflation fell as discussed above in this example, would you plan to expand production or cut back? Why? (Points : 40)

Set 3

1. Suppose you are hired to manage a samll manufacturing facility that produces widgets
A. You know form data collected on the widget marekt that the market demand has recently increased and mareket supply has recently decreased. As manager of the facility, what decison should you make regarding production levels and pricing for you wideget facility?
Remember that supply and deman are about the makert supply and market demand, which is bigger than your own company. You are being given data on supply and demand for the whole market and are being asked what effect that has on you as a small part of that market
B. Now suppose that follwing the supply and demand changes in (a) a subsitute good goes up in price, and your cost of product decrease. What decisons will you make regarding production levels and pricing for your widget facility?

2. Here is data on the demand for lettuce
Price Quantity
10$ 100
8$ 120
6$ 140
4$ 160
2$ 180
A. Is demand elastic or inelastic in the 6-8$ price range? How do you know?

(b.) (15 points) If the table represents the demand faced by a monopoly firm, then what is that firm’s marginal revenue as it increases output from 160 units to 180 units? Show all work. (Be careful here!) (Points : 30)
3.A Suppose nominal GDP in 1999 was 100billion and in 2001 it was 260billion. The general price index in 199 was 100, and in 2001 it was 180. Between 1999 and 2001, the real GDP rose by what present?

4. Suppose your local congress representive suggest that the federal government intervenes in the gasonline market to stop runaway price increases. Would you say that this view bsically supports the Keynesin or Monetarist school of thought? Why? What postion would the opposting school of though tke on this issue?
b. Any change in the economys total expenditures would be expected to translate into change in GDP that was larger than the initial change in spending. This phenomenon os known as the multiplier effect. Explain the multipler effect works.

c. you are told that 90 cents our of every extra dollar pumpled into the econoomy goes toward consumption (as opposed to saving) Estimate the GDP impact of positive change in govenment spending that equals 20 billion.

5. Reserve requirment for banks is set at 5%. Your firm depositis it profits of 28,000 inot the Third National Bank.
A. How much excess reserve does your deposit generate for the bank?
What is the maximum amount of new money that can be created in the banking system as a result of this deposit? Show all work
B. What is the federal funds rate in the banking system?
Explain how the fed manipulates this rate in order to achieve macroeonmic objectives?
6. Let the exchange rate be defined as the number of dollars per Japanese yen. Assume there is a increase in U.S interest ratres relative to that of Japan.
A. Would this event cause the demand for the dollar to increase or decrease relative to the demand for the yen? Why?
b.) Has the dollar appreciatred or depreciated in value relative to the yen?
c.) Does this change in the value of the dollar make imports cheaper or more expensive for Americans? Are American exports cheaper or more expensive for importers of U.S goods in Japan? Illustrate by showing the price of a U.S e reader in japan before and after the change in the exchange rate.

d.) If you had a business exporting good to japan, and u.s interest rate rose as they have in this example, would you plan to expand production or cut back? Why

1. A software producer has fixed cost of 20,000 per month and her total variable costs TVC as a function fo output Q are given below. Complete the table (TC, MC, TR, and MR)
Q TVC Price
2,000 5,000 25
4,000 7,000 22
6,000 18,000 20
8,000 33,000 10
10,000 50,000 1
A. If software can only be produced in the quantities above, what should be the production level if the producer operates in a monopolistic cometitive market whre the price of software at each possible quantity is also listed above? Why? (show work)

B. What should be the production level if fixed cost rose to 70,000 per month? Explain

1. A software producer has fixed cost of 20,000 per month and her total variable costs TVC as a function fo output Q are given below. Complete the table (TC, MC, TR, and MR)
Q TVC Price
2,000 5,000 25
4,000 7,000 22
6,000 18,000 20
8,000 33,000 10
10,000 50,000 1
A. If software can only be produced in the quantities above, what should be the production level if the producer operates in a monopolistic cometitive market whre the price of software at each possible quantity is also listed above? Why? (show work)
B. What should be the production level if fixed cost rose to 70,000 per month? Explain

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ECON-545-Business Economics_Final Exam

 

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ECON-545- Business Economics_Course Week 8 Final Exam_Answer_ALL Sets

ECON-545- Business Economics_Course Week 8 Final Exam_Answer_ALL Sets

ECON-545- Business Economics_Course Week 8 Final Exam_Answer_ALL Sets

ECON-545- Business Economics_Course Week 8 Final Exam_Answer_ALL Sets

ECON-545- Business Economics_Course Week 8 Final Exam_Answer_ALL Sets

Set 1

1. Question : (TCO A) Suppose you are hired to manage a small manufacturing facility that produces Widgets.

(a.) (15 points) You know from data collected on the Widget Market that market demand and market supply have both increased recently. As manager of the facility, what decisions should you make regarding production levels and pricing for your Widget facility?

Remember that supply and demand are about the market supply and market demand, which is bigger than your own company. You are being given data on supply and demand for the whole market and are being asked what effect that has on you as a small part of that market.

(b.) (15 points) Now, suppose that following the supply and demand changes in (a), a substitute good goes up in price, and your costs of production increase. What new decisions will you make regarding production levels and pricing for your Widget facility?
(TCO B) Here is some data on the demand for marshmallows:

Price Quantity
$10 100
$ 8 300
$ 6 700
$ 4 1300
$ 2 2200

(a.) (15 points) Is demand elastic or inelastic in the $6-$8 price range? How do you know?

(b.) (15 points) If the table represents the demand faced by a monopoly firm, then what is that firm’s marginal revenue as it increases output from 1300 units to 2200 units? Show all work. (Be careful here!)
3. Question : (TCO C) You have been hired to manage a small manufacturing facility whose cost and production data are given in the table below.
Total Total
Workers Labor Cost Output Revenue
1 $500 100 $700
2 1000 280 1150
3 1500 440 1440
4 2000 540 1570
5 2500 600 1670
6 3000 630 1710
7 3500 640 1730

(a.) (6 points) What is the marginal product of the second worker?

(b.) (6 points) What is the marginal revenue product of the fourth worker?

(c.) (6 points) What is the marginal cost of the first worker?

(d.) (12 points) Based on your knowledge of marginal analysis, how many workers should you hire? Explain you answer.

4. Question : (TCO C) Answer the next questions on the basis of the following cost data for a firm in pure competition:

OUTPUT —— TFC ———- TVC
0 $100.00 0.00
1 100.00 70.00
2 100.00 120.00
3 100.00 150.00
4 100.00 200.00
5 100.00 270.00
6 100.00 360.00

(a.) (15 points) Refer to the above data. If the product price is $45 at its optimal output, will the firm realize an economic profit, break even, or incur an economic loss? How much will the profit or loss be? Show all calculations.

(b.) (15 points) Refer to the above data. If the product price is $75 at its optimal output, will the firm realize an economic profit, break even, or incur an economic loss? How much will the profit or loss be? Show all calculations.

5. Question : (TCO D) A software producer has fixed costs of $18,000 per month and her Total Variable Costs (TVC) as a function of output Q are given below:

Q TVC Price
1,000 $15,000 $25
2,000 20,000 24
3,000 30,000 23
4,000 50,000 22
5,000 80,000 20
(a.) (15 points) If software can only be produced in the quantities above, what should be the production level if the producer operates in a monopolistic competitive market where the price of software at each possible quantity is also listed above? Why? (Show all work).

(b.) (15 points) What should be the production level if fixed costs rose to $48,000 per month? Explain.
6. Question : (TCO F)

(a.) (20 points) Suppose nominal GDP in 1999 was $200 billion, and in 2001, it was $270 billion. The general price index in 1999 was 100 and in 2001 it was 150. Between 1999 and 2001, the real GDP rose by what percent?

(b.) Use the following scenario to answer questions (b1) and (b2).
In a given year in the United States, the total number of residents is 270 million, the number of residents under the age of 16 is 38 million, the number of institutionalized adults is 15 million, the number of adults who are not looking for work is 17 million, and the number of unemployed is 10 million.

(b1.) (5 points) Refer to the data in the above scenario. What is the size of the labor force in the United States for the given year?

(b2.) (5 points) Refer to the data in the above scenario. What is the unemployment rate in the United States for the given year?
7. Question : (TCO G and H)

(a.) (15 points) Suppose your local Congress representative suggests that the federal government intervenes in the gasoline market to stop runaway price increases. Would you say that this view basically supports the Keynesian or the Monetarist school of thought? Why? What position would the opposing school of thought take on this issue? (Be brief — you can answer this in 2 or 3 brief paragraphs).

(b.) (10 points) Any change in the economy’s total expenditures would be expected to translate into a change in GDP that was larger than the initial change in spending. This phenomenon is known as the multiplier effect. Explain how the multiplier effect works.

(c.) (15 points) You are told that 90 cents out of every extra dollar pumped into the economy goes toward consumption (as opposed to saving). Estimate the GDP impact of a positive change in government spending that equals $20 billion.

8. Question : (TCO G)
(a.) (20 points) Third National Bank is fully loaned up with reserves of $20,000 and demand deposits equal to $100,000. The reserve ratio is 20%. Households deposit $5,000 in currency into the bank. How much excess reserves does the bank now have, and what is the maximum amount of new money that can be created in the banking system as a result of this deposit? Show all work.

(b.) (20 points) What is the discount rate in the banking system? Explain how the Fed manipulates this rate to achieve macroeconomic objectives.
9. Question : (TCO E and I) Let the exchange rate be defined as the number of dollars per British pound. Assume there is a decrease in U.S. interest rates relative to that of Britain.

(a.) (10 points) Would this event cause the demand for the dollar to increase or decrease relative to the demand for the pound? Why?

(b.) (10 points) Has the dollar appreciated or depreciated in value relative to the pound?

(c.) (10 points) Does this change in the value of the dollar make imports cheaper or more expensive for Americans? Are American exports cheaper or more expensive for importers of U.S. goods in Great Britain? Illustrate by showing the price of a U.S. cell phone in Britain before and after the change in the exchange rate.

(d.) (10 points) If you had a business exporting goods to Britain, and U.S. interest rates fell as they have in this example, would you plan to expand production or cut back? Why?

Set 2

1. (TCO A) Suppose you are hired to manage a small manufacturing facility that produces Widgets.

(a.) (15 points) You know from data collected on the Widget Market that market demand has recently increased and market supply has recently decreased. As manager of the facility, what decisions should you make regarding production levels and pricing for your Widget facility?

Remember that supply and demand are about the market supply and market demand, which is bigger than your own company. You are being given data on supply and demand for the whole market and are being asked what effect that has on you as a small part of that market.

(b.) (15 points) Now, suppose that following the supply and demand changes in (a), a substitute good goes up in price, and your costs of production decrease. What new decisions will you make regarding production levels and pricing for your Widget facility? (Points : 30)

2. (TCO B) Here is some data on the demand for lettuce:

Price Quantity
$10 100
$ 8 120
$ 6 140
$ 4 160
$ 2 180

(a.) (15 points) Is demand elastic or inelastic in the $6-$8 price range? How do you know?

(b.) (15 points) If the table represents the demand faced by a monopoly firm, then what is that firm’s marginal revenue as it increases output from 160 units to 180 units? Show all work. (Be careful here!) (Points : 30)
. (TCO C) You have been hired to manage a small manufacturing facility whose cost and production data are given in the table below.

Total Total
Workers Labor Cost Output Revenue
1 $200 50 $350
2 400 140 675
3 600 220 1120
4 800 270 1570
5 1000 300 1865
6 1200 315 2070
7 1400 320 2170

(a.) (6 points) What is the marginal product of the second worker?

(b.) (6 points) What is the marginal revenue product of the fourth worker?

(c.) (6 points) What is the marginal cost of the first worker?

(d.) (12 points) Based on your knowledge of marginal analysis, how many workers should you hire? Explain you answer. (Points : 30)
4. (TCO C) John operates a small business out of his home and has very little in terms of fixed costs. Answer the next questions (Parts A and B) on the basis of the following cost data for John’s firm operating in pure competition:

OUTPUT —— TFC ———- TVC
0 $30.00 0.00
1 30.00 70.00
2 30.00 120.00
3 30.00 150.00
4 30.00 200.00
5 30.00 270.00
6 30.00 360.00

(a.) (15 points) Refer to the above data. If the product price is $60, at its optimal output, will the firm realize an economic profit, break even, or incur an economic loss? How much will the profit or loss be? Show all calculations.

(b.) (15 points) Refer to the above data. If the product price is $55 at its optimal output, will the firm realize an economic profit, break even, or incur an economic loss? How much will the profit or loss be? Show all calculations. (Points : 30)
5. (TCO D) A software producer has fixed costs of $30,000 per month and her Total Variable Costs (TVC) as a function of output Q are given below:

Q TVC Price
3,000 $ 5,000 $5
13,000 25,000 4
23,000 50,000 3
33,000 80,000 2
43,000 120,000 1
(a.) (15 points) If software can only be produced in the quantities above, what should be the production level if the producer operates in a monopolistic competitive market where the price of software at each possible quantity is also listed above? Why? (Show all work.)
(b.) (15 points) What should be the production level if fixed costs rose to $50,000 per month? Explain.
6. (TCO F)

(a.) (20 points) Suppose nominal GDP in 1999 was $200 billion, and in 2001, it was $270 billion. The general price index in 1999 was 100 and in 2001 it was 150. Between 1999 and 2001, the real GDP rose by what percent?

(b.) Use the following scenario to answer questions (b1) and (b2).
In a given year in the United States, the total number of residents is 270 million, the number of residents under the age of 16 is 38 million, the number of institutionalized adults is 15 million, the number of adults who are not looking for work is 17 million, and the number of unemployed is 10 million.

(b1.) (5 points) Refer to the data in the above scenario. What is the size of the labor force in the United States for the given year?

(b2.) (5 points) Refer to the data in the above scenario. What is the unemployment rate in the United States for the given year? (Points : 30)
7. (TCO G and H)

(a.) (15 points) Suppose your local Congress representative suggests that the federal government intervenes in the gasoline market to stop runaway price increases. Would you say that this view basically supports the Keynesian or the Monetarist school of thought? Why? What position would the opposing school of thought take on this issue? (Be brief — you can answer this in 2 or 3 brief paragraphs).

(b.) (10 points) Any change in the economy’s total expenditures would be expected to translate into a change in GDP that was larger than the initial change in spending. This phenomenon is known as the multiplier effect. Explain how the multiplier effect works.

(c.) (15 points) You are told that 90 cents out of every extra dollar pumped into the economy goes toward consumption (as opposed to saving). Estimate the GDP impact of a positive change in government spending that equals $20 billion.
(Points : 40)
8. (TCO G)

(a.) Reserve requirement for banks is set at 5%. Your firm deposits its profits of $28,000 into the Third National Bank.

(10 points) How much excess reserve does your deposit generate for the bank?

(10 points) What is the maximum amount of new money that can be created in the banking system as a result of this deposit? Show all work.

(b.) (10 points) What is the Federal Funds Rate in the banking system?

(10 points) Explain how the Fed manipulates this rate in order to achieve macroeconomic objectives. (Points : 40)

9. (TCOs E and I) Let the exchange rate be defined as the number of dollars per Japanese yen. Assume that there is a relatively lower rate of inflation in the U.S. relative to that of Japan.

(a.) (10 points) Would this event cause the demand for the dollar to increase or decrease relative to the demand for the yen? Why?

(b.) (10 points) Has the dollar appreciated or depreciated in value relative to the yen?

(c.) (10 points) Does this change in the value of the dollar make imports cheaper or more expensive for Americans? Are American exports cheaper or more expensive for importers of U.S. goods in Japan? Illustrate by showing the price of a U.S. e-reader in Japan, before and after the change in the exchange rate.

(d.) (10 points) If you had a business exporting goods to Japan, and U.S. inflation fell as discussed above in this example, would you plan to expand production or cut back? Why? (Points : 40)

Set 3

1. Suppose you are hired to manage a samll manufacturing facility that produces widgets
A. You know form data collected on the widget marekt that the market demand has recently increased and mareket supply has recently decreased. As manager of the facility, what decison should you make regarding production levels and pricing for you wideget facility?
Remember that supply and deman are about the makert supply and market demand, which is bigger than your own company. You are being given data on supply and demand for the whole market and are being asked what effect that has on you as a small part of that market
B. Now suppose that follwing the supply and demand changes in (a) a subsitute good goes up in price, and your cost of product decrease. What decisons will you make regarding production levels and pricing for your widget facility?

2. Here is data on the demand for lettuce
Price Quantity
10$ 100
8$ 120
6$ 140
4$ 160
2$ 180
A. Is demand elastic or inelastic in the 6-8$ price range? How do you know?

(b.) (15 points) If the table represents the demand faced by a monopoly firm, then what is that firm’s marginal revenue as it increases output from 160 units to 180 units? Show all work. (Be careful here!) (Points : 30)
3.A Suppose nominal GDP in 1999 was 100billion and in 2001 it was 260billion. The general price index in 199 was 100, and in 2001 it was 180. Between 1999 and 2001, the real GDP rose by what present?

4. Suppose your local congress representive suggest that the federal government intervenes in the gasonline market to stop runaway price increases. Would you say that this view bsically supports the Keynesin or Monetarist school of thought? Why? What postion would the opposting school of though tke on this issue?
b. Any change in the economys total expenditures would be expected to translate into change in GDP that was larger than the initial change in spending. This phenomenon os known as the multiplier effect. Explain the multipler effect works.

c. you are told that 90 cents our of every extra dollar pumpled into the econoomy goes toward consumption (as opposed to saving) Estimate the GDP impact of positive change in govenment spending that equals 20 billion.

5. Reserve requirment for banks is set at 5%. Your firm depositis it profits of 28,000 inot the Third National Bank.
A. How much excess reserve does your deposit generate for the bank?
What is the maximum amount of new money that can be created in the banking system as a result of this deposit? Show all work
B. What is the federal funds rate in the banking system?
Explain how the fed manipulates this rate in order to achieve macroeonmic objectives?
6. Let the exchange rate be defined as the number of dollars per Japanese yen. Assume there is a increase in U.S interest ratres relative to that of Japan.
A. Would this event cause the demand for the dollar to increase or decrease relative to the demand for the yen? Why?
b.) Has the dollar appreciatred or depreciated in value relative to the yen?
c.) Does this change in the value of the dollar make imports cheaper or more expensive for Americans? Are American exports cheaper or more expensive for importers of U.S goods in Japan? Illustrate by showing the price of a U.S e reader in japan before and after the change in the exchange rate.

d.) If you had a business exporting good to japan, and u.s interest rate rose as they have in this example, would you plan to expand production or cut back? Why

1. A software producer has fixed cost of 20,000 per month and her total variable costs TVC as a function fo output Q are given below. Complete the table (TC, MC, TR, and MR)
Q TVC Price
2,000 5,000 25
4,000 7,000 22
6,000 18,000 20
8,000 33,000 10
10,000 50,000 1
A. If software can only be produced in the quantities above, what should be the production level if the producer operates in a monopolistic cometitive market whre the price of software at each possible quantity is also listed above? Why? (show work)

B. What should be the production level if fixed cost rose to 70,000 per month? Explain

1. A software producer has fixed cost of 20,000 per month and her total variable costs TVC as a function fo output Q are given below. Complete the table (TC, MC, TR, and MR)
Q TVC Price
2,000 5,000 25
4,000 7,000 22
6,000 18,000 20
8,000 33,000 10
10,000 50,000 1
A. If software can only be produced in the quantities above, what should be the production level if the producer operates in a monopolistic cometitive market whre the price of software at each possible quantity is also listed above? Why? (show work)
B. What should be the production level if fixed cost rose to 70,000 per month? Explain

For getting the solution, Please click on the “PURCHASE” link below to get ECON-545- Business Economics_Course Week 8 Final Exam_Answer_ALL Sets

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In case you find any problem in getting the download link or downloading the tutorial, please send us an email on mail@genietutorial.com

Posted on

ECON-545- Business Economics_Course Week 8 Final Exam_Answer_ALL Sets

ECON-545- Business Economics_Course Week 8 Final Exam_Answer_ALL Sets

ECON-545- Business Economics_Course Week 8 Final Exam_Answer_ALL Sets

ECON-545- Business Economics_Course Week 8 Final Exam_Answer_ALL Sets

ECON-545- Business Economics_Course Week 8 Final Exam_Answer_ALL Sets

For getting the solution, Please click on the “PURCHASE” link below to get ECON-545- Business Economics_Course Week 8 Final Exam_Answer_ALL Sets

For instant digital download of the above solution or tutorial, please click on the below link and make an instant purchase. You will be guided to the PAYPAL Standard payment page wherein you can pay and you will receive an email immediately with a download link. Please note that in case of technical glitch, the solutions will be emailed to you within 24 hours.

In case you find any problem in getting the download link or downloading the tutorial, please send us an email on mail@genietutorial.com