Week 1 Discussion
Opportunity Cost (graded)
Give an example of how the Principle of Opportunity Cost applies to your life. Think of a recent decision you made. It could be a decision as simple as whether to eat out or cook your own dinner, or it could be a decision to quit your job and go back to school. What alternatives did you consider? How did you arrive at your final decision? Did you implicitly weigh marginal cost and marginal benefit? How does the concept of opportunity cost apply to production possibilities curve (PPC) analysis? How can we use PPC analysis to examine what we do?
Economic Systems (graded)
Think of a business firm you recently visited (such as Walmart, Home Depot, Red Lobster, Barnes & Noble, McDonald’s, etc.). What motivated the producers of all the individual products in the store to make them and offer them for sale? How did the producers decide on the best combinations of resources to use? Who made those resources available, and why? How does the market determine who will get the goods and services? Who decides whether these particular products should continue to be produced and offered for sale? How do these decisions differ between capitalist and socialist systems?
Week 2 Discussion
Demand, Supply, and Market Equilibrium
Think about a product that you have purchased recently (e.g. soda, diapers, takeout meals, milk, shoes, manicure/pedicure, video game, etc.). Explain how the law of demand affected your purchase. Give specific examples of how the determinants of demand and supply affect this product (T-I-P-E-N and P-R-E-S-T). What happens to the demand curve and the supply curve when any of these determinants change? Give examples of scenarios that would cause a change in demand versus a movement along the same demand curve and supply curve for this product. Discuss the new equilibrium price and quantity that result from these changes. Can you demonstrate some of these changes graphically?
Price Elasticity of Demand
Think of another good that you have purchased recently (or you could continue with the good you selected in TDA I). Be specific (e.g. is it breakfast cereal in general or Cheerios cereal specifically). If the price of this item increases, how would this affect the quantity of the good that you consume? Is the Demand for this good Price elastic or Price inelastic? Justify your classification by talking about the determinants of elasticity as they apply to this product. Say price is on the rise for this product and you are the manager of a store, would you be thrilled to be selling this product? Under what circumstances would you want to own a business that sells this product? In other words, how does an increase in price for this good affect your Total Revenue? Using specific examples, relate the concepts of Cross Elasticity and Income Elasticity to this product.
Week 3 Discussion
A Firm’s Shut Down Decision (graded)
Say you are the manager of a perfectly competitive firm selling a product. Your business is making a loss because total revenue is less than total costs. What would you do–shut down or continue to operate? Use hypothetical numbers to explain. Information you need to provide include–state the product you are selling, the price of the product, the quantity of the product you produce, fixed costs, total cost, figure out total revenue, total and average variable costs. Then go ahead and make your decision. Explain carefully why it makes better sense to shut down rather than continue to operate or to continue to operate rather than shut down, as the case may be. How do fixed costs play a role in your analysis? What is the difference between shutting down and going out of business?
Market Structure Classification (graded)
Think about a firm that you have done business with recently. What industry does this firm belong to? For example, McDonald’s is a firm in the fast food industry. What market structure would this industry fall under? What are the names of other firms in this industry? Is it monopolistic competition, oligopoly, monopoly, or perfect competition? Justify your classification of the firm. Use the characteristics/features of the different market structure to determine which market structure to classify your chosen firm.
Week 4 Discussion
Go to the Bureau of Economic Analysis website, www.bea.gov, and access the BEA interactively by selecting “National Accounts” and then “National Income and Product Account Tables.” Select “Frequently Requested NIPA Tables,” and find Table 1.1.1 on GDP. What is the current GDP growth rate for the U.S.? Examine the trend over the past few years. What trends interest you? What stage of the Business Cycle would the U.S. economy be in currently given the trends? Why might GDP not be considered an accurate measure of economic well-being of a country? Identify at least three limitations of GDP as a measure of economic well-being.
Unemployment and Inflation (graded)
Go to the Bureau of Labor Statistics website, www.bls.gov/news.release/empsit.toc.htm, and click on “Employment Situation Summary” to get the most up-to-date summary of unemployment in the U.S. or the “Employment Situation Summary Table A. Household data, seasonally adjusted.” What interests or surprises you about the summary table? How does that rate compare with the rate in the previous month or quarter? Discuss the differences in unemployment rates by gender, age, education, etc.
Week 5 Discussion
Aggregate Demand and Aggregate Supply (graded)
Go to the BEA website www.bea.gov. On the left tab under Publications, go to the Interactive Data Tables. Select National Income and Product Accounts. From Table 1.1.6 and 1.1.7 examine all four components of GDP (C, I, G, and Xn). Which of these four components of AD declined the most during the 2007 and 2009 recession? Do you think an increase in government’s spending (G) can boost the Aggregate Demand (AD) in a recession? Analyze why the economy may operate below full-employment GDP in the short run. How can the multiplier have a negative effect? What is the relationship between the multiplier and the marginal propensities? Explain.
Fiscal Policy (graded)
Give an example of an event or incident that has taken place in the U.S. economy which has a major economic impact–be specific, e.g., 9/11 attack, natural disaster, rise or fall in oil prices due to OPEC policies, consumer optimism or pessimism about an expected economic expansion or downturn, increase in government spending on healthcare, tightening of the legal and institutional environment, and so forth. What effect would this event have on AD or AS, other things being constant? What would be the resulting effect on equilibrium price level? Explain. What will be the effect of the different tools of fiscal policy to stabilize the economy? Give an example of a built-in stabilizer and explain how it would work to reduce this rise or fall in the level of AD.
Week 6 Discussion
What factors led to the mortgage default crisis? How did mortgage defaults affect banks involved in mortgage lending and mortgage investing? Securitization? TARP? What do these mean? How did mortgage-backed securities spread losses during the mortgage default crisis? How does TARP illustrate the problem of moral hazard? What did the Federal Reserve do during the financial crisis of 2008 and 2009? How did the recent financial crisis affect the financial services industry? What are some of the major provisions of the Wall Street Reform and Consumer Protection Act?
Monetary Policy and the Federal Reserve (graded)
What is the Federal Reserve (Fed) all about? Which Federal Reserve District Bank is closest to you? Who is the current Chairman of the Fed? Should the Fed remain independent from political authority or should the President and Congress have a say in their operations? Why? Why not? What is FOMC? What is the current Federal Funds Rate? How does the Fed implement monetary policy to manage the economy? At the last meeting of the FOMC, what was done to the federal funds rate–increased, decreased, or no change from previous meeting? Given the current state of the U.S. economy, should the Fed be using expansionary monetary policy or contractionary monetary policy? Why? Why Not?
Week 7 Discussion
Are you for or against free trade? Are you for or against NAFTA? What is the economic basis for trade? Explain the underlying facts that support free trade and give an example of a good that you purchased recently that is based on resource differences. What are some examples of goods that the U.S. has comparative advantage in producing? Take a look at the tag of the shirt/dress/pants you are wearing today. Where was it made? Anyone wearing “Made in America” items of clothing today? We sometimes hear people say “Buy American.” Why don’t we? What is the basis of international trade? What are the benefits and the costs? Under what conditions would you advocate for trade restrictions?
Foreign Exchange (graded)
What is happening to the value of the U.S. dollar these days? What causes the value of the U.S. dollar to rise or fall? Who demands U.S. dollar? Who supplies U.S. dollar? When we purchase German products, does our demand for euro go up or down? What are freely floating exchange rates all about, and how do they work? How can the falling U.S. dollar impact your travel expenses? Why would a cheap dollar relative to other nations’ currencies be good or bad for U.S. trade?
Question 1. Question :
(TCO 1) The general concern of economics is with the study of theStudent Answer: degree of competition in stock and bond markets in the economy.
efficient use of limited productive resources to satisfy economic wants.
issue of equality in the distribution of income and wealth among households.
budget deficits in the domestic economy and trade deficits in the international economy.
(TCO 1) The term scarcity in economics refers to the fact that
economic wants are limited and resources are abused.
even in the richest country some people go hungry.
no country can produce enough products to satisfy everybody’s economic wants.
it is impossible to produce too much of any particular good or service in a market economy.
(TCO 1) Are the goods that businesses offer for “free” to consumers also free to society?
Yes, because the individual consumer does not have to pay for them.
Yes, because the marginal benefit is greater than the marginal cost.
No, because scarce resources were used to produce the free goods.
No, because society does not assign a value to free goods.
(TCO 1) Which is considered to be an economic resource by economists?
(TCO 1) If an economy is producing at a point inside a production possibilities curve, then
the economy is efficient.
there is economic growth.
resources are unemployed.
resources are fully employed.
(TCO 1) Which would not be characteristic of a capitalist economy?
Government ownership of the factors of production
Competition and unrestricted markets
Reliance on the market system
Free enterprise and choice
(TCO 1) The term dollar votes means
inflation will occur if consumers don’t spend wisely.
voters may be offered dollars to help elect certain political candidates.
government is responsible for determining what will be considered legal tender.
consumers “vote” for certain products to be produced by how they spend their incomes.
Question 8. Question :
assumes that central planning is taking place.
illustrates how natural resources are created.
illustrates how money is created by the banking system.
illustrates the interdependence of businesses and consumers.
(TCO 1) In a market system, well-defined property rights are important because they
reduce unnecessary investment.
limit destructive economic growth.
create economic problems.
encourage economic activity.
(TCO 1) Which is necessary to make a trade in a barter economy?
A medium of exchange
A coincidence of wants
(TCO 1) Tammie makes $150 a day as a bank clerk. She takes off two days of work without pay to fly to another city to attend the concert of her favorite music group. The cost of transportation for the trip is $250. The cost of the concert ticket is $50. What is the opportunity cost of Tammie’s trip to the concert? Show your calculations
(TCO 1) Identify some intrinsic qualities ofcapitalist and command economic systems. Identify two countries that practice each.Question 1. Question :
(TCO 2) Economists use the term “demand” to refer toa particular price-quantity combination on a stable demand curve.
the total amount spent on a particular commodity over a stipulated time period.
an upsloping line on a graph that relates consumer purchases and product price.
a schedule of various combinations of market prices and quantities-demanded.
: 1 of 1
(TCO 2) Which of the following would not shift the demand curve for beef?
A widely publicized study that indicates beef increases one’s cholesterol
A reduction in the price of cattle feed
An effective advertising campaign by pork producers
A change in the incomes of beef consumers
(TCO 2) Which of the following is most likely to be an inferior good?
Instructor Explanation: Chapter 3.
Points Received: 1 of 1
(TCO 2) Which of the following would mostly likely increase the demand for gasoline?
The expectation by consumers that gasoline prices will be higher in the future
The expectation by consumers that gasoline prices will be lower in the future
A widespread shift in car ownership from SUVs to hybrid sedans
A decrease in the price of public transportation
(TCO 2) The supply curve shows the relationship between
price and quantity supplied.
production costs and the amount demanded.
total business revenues and quantity supplied.
physical inputs of resources and the resulting units of output.
(TCO 2) The price elasticity of demand is generally
negative, but the minus sign is ignored.
positive, but the plus sign is ignored.
positive for normal goods and negative for inferior goods.
positive because price and quantity demanded are inversely related.
(TCO 2) Suppose the price* of local cable TV service increased from $16.20 to $19.80, and as a result, the number of cable subscribers decreased from 224,000 to 176,000. Use the Midpoint formula to find the answer. Along this portion of the demand curve, price elasticity of demand is
(TCO 2) A firm can sell as much as it wants at a constant price. Demand is thus
(TCO 2) The demand schedules for such products as eggs, bread, and electricity tend to be
perfectly price elastic.
of unit price elasticity.
relatively price inelastic.
relatively price elastic.
(TCO 2) The demand for autos is likely to be
less price elastic than the demand for Honda Accords.
more price elastic than the demand for Honda Accords.
of the same price elasticity as the demand for Honda Accords.
(TCO 2) What is the Law of Supply? Why does the supply curve slope upwards?
Question 12. Question :
(TCO 2) Suppose the price of widgets falls from $7 to $5 and consumption of widgets rises from 15 widgets a month to 25 widgets. Calculate your price elasticity of demand of widgets. What can you saQuestion: Antitrust Practices and Market Power
Key concepts to include in your paper include the following.
Monopoly Market StructureOligopoly Market StructureBarriers to Entry Into the MarketNatural MonopolyGovernment MonopolyDownward Sloping Demand CurveEconomies of ScalePrice FixingCollusionMonopoly PricingPrice MakerMarket PowerEconomic ProfitsImperfect CompetitionRent-Seeking BehaviorX-InefficiencyDeadweight Loss to SocietyMarginal CostMarginal RevenueAntitrustYou must use at minimum at least one article from the Online Library. Note: Although your textbook is a good source of knowledge, it is NOT an article and cannot be the only sourcefor the assignment. Cite all your references in APA format. You can use the Citations & Bibliography function of Microsoft Word, which is found under the References tab.Question 1. Question :
(TCO 6) Fiscal policy refers to themanipulation of government spending and taxes to stabilize domestic output, employment, and the price level.
manipulation of government spending and taxes to achieve greater equality in the distribution of income.
altering of the interest rate to change aggregate demand.
fact that equal increases in government spending and taxation will be contractionary.
Question 2. Question :
(TCO 6) Suppose that the economy is in the midst of a recession. Which of the following policies would most likely end the recession and stimulate output growth?
A Congressional proposal to incur a Federal surplus to be used for the retirement of public debt.
Reductions in agricultural subsidies and veterans’ benefits.
Postponement of a highway construction program.
Reductions in Federal tax rates on personal and corporate income.
(TCO 6) The crowding-out effect of expansionary fiscal policy suggests that
government spending increases at the expense of private investment.
imports replace domestic production.
private investment increases at the expense of government spending.
saving increases at the expense of investment.
(TCO 5) Which of the following would not shift the aggregate supply curve?
An increase in labor productivity
A decline in the price of imported oil
A decline in business taxes
An increase in the price level
(TCO 6) Other things equal, a reduction in personal and business taxes can be expected to
: increase aggregate demand and decrease aggregate supply.
increase both aggregate demand and aggregate supply.
decrease both aggregate demand and aggregate supply.
decrease aggregate demand and increase aggregate supply.
(TCO 6) The MPC can be defined as that fraction of a
change in income that is not spent.
change in income that is spent.
given total income that is not consumed.
given total income that is consumed.
(TCO 6) Dissaving means
the same thing as disinvesting.
that households are spending more than their current incomes.
that saving and investment are equal.
that disposable income is less than zero.
(TCO 5) Refer to the graph. Which of the following factors will shift AD1 to AD3?
An increase in expected returns on investment
An increase in productivity
A decrease in real interest rates
A decrease in consumer wealth
Question 9. Question :
Question: What is the “current macroeconomic situation” in the U.S. (e.g. is the U.S. economy currently concerned about unemployment, inflation, recession, etc.)? What fiscal policies and monetary policies would be appropriate at this time?1. Write your individual answers to the questions listed above together in essay format (minumum of 300 words combined in APA style), using correct economic terms covered in the discussions.If you only write 300 words, you probably won’t be able to fully answer the questions. Use the APA Template in Doc Sharing as a guide. You will also find the grading rubric for this assignment in Doc Sharing.
2. Key concepts to include in your paper–data trends on unemployment, inflation, GDP growth, expansionary fiscal policy tools, FOMC, easy money policy tools and other terms from this class.
3. You must use at least one article. Note: The textbook is not an article and cannot be the only source for the assignments. Use the Library as a resource for finding your references.
Question 1. Question :
(TCO 1) As a consequence of the condition of scarcitythere is never enough of anything.
production has to be centrally planned.
things which are plentiful have relatively high prices.
individuals and communities have to make choices from among alternatives.
(TCO 1) The opportunity cost of constructing a new public highway is the
money cost of hiring contractors and construction workers for the new highway.
value of other goods and services that must be sacrificed to construct the new highway.
expected cost of constructing the new highway in a future year.
value of shorter driving times and distances when the new highway is completed.
(TCO 1) A nation can increase its production possibilities by
shifting resources from investment good production to consumer good production.
shifting resources from private goods to public goods.
improving labor productivity.
Question 4. Question :
(TCO 1) Which expression is another way of saying “marginal benefit”?
Benefits given up
(TCO 1) The individual who brings together economic resources and assumes the risk of business ventures in a capitalist economy is called the
(TCO 1) The Soviet Union economy of the 1980s would best be classified as
a market system.
a command system.
(TCO 1) Consumers express self-interest when they
seek the lowest price for a product.
reduce business losses.
collect economic profits.
search for jobs with the highest wages.
(TCO 1) Which is not one of the five fundamental questions that an economy must deal with?
How will the goods and services be produced?
Why should the goods and services be produced?
Who is to receive the goods and services produced in the economy?
In what ways will progress be promoted?
(TCO 1) The major “success indicator” for business managers in command economies like the Soviet Union and China in the past was
the quantity of output.
the amount of profits.
(TCO 2) An increase in demand means that
given supply, the price of the product will decline.
the demand curve has shifted to the right.
price has declined and consumers therefore want to purchase more of the product.
the demand curve has shifted to the left.
(TCO 2) At the point where the demand and supply curves intersect
the buying and selling decisions of consumers and producers are inconsistent with one another.
the market is in disequilibrium.
there is neither a surplus nor a shortage of the product.
quantity demanded exceeds quantity supplied.
(TCO 2) Black markets are associated with
price floors and the resulting product surpluses.
price floors and the resulting product shortages.
price ceilings and the resulting product shortages.
price ceilings and the resulting product surpluses.
(TCO 2) An increase in demand for oil along with a simultaneous increase in supply of oil will
decrease price and increase quantity.
increase price and decrease quantity.
increase quantity, but whether it increases price depends on how much each curve shifts.
increase price, but whether it increases quantity depends on how much each curve shifts.
(TCO 2) If Product Y is an inferior good, a decrease in consumer incomes will
make buyers want to buy less of Product Y.
not affect the sales of Product Y.
shift the demand curve for Product Y to the left.
shift the demand curve for Product Y to the right.
(TCO 2) If the price elasticity of demand for a product is equal to 0.5, then a 10 percent decrease in price will increase quantity demanded by
(TCO 2) Total revenue falls as the price of a good is raised, if the demand for the good is
(TCO 2) You are the sales manager for a software company and have been informed that the price elasticity of demand for your most popular software is less than 1. To increase total revenues, you should:
increase the price of the software.
decrease the price of the software.
hold the price of the software constant.
increase the supply of the software.
(TCO 2) A state government wants to increase the taxes on cigarettes to increase tax revenue. This tax would only be effective in raising new tax revenues if the price elasticity of demand is
(TCO 2) When universities announce a large tuition increase and follow it with an announcement that more financial aid will be available, they are assuming that students who pay full tuition
: have elastic demand and students who use financial aid have inelastic demand.
have inelastic demand and students who use financial aid have elastic demand.
view a college education as an inferior good and students who use financial aid view it as a normal good.
view a college education as a normal good and students who use financial aid view it as an inferior good.
(TCO 3) Suppose that you could prepare your own tax return in 15 hours, or you could hire a tax specialist to prepare it for you in two hours. You value your time at $11 an hour. The tax specialist will charge you $55 an hour. The opportunity cost of preparing your own tax return is
(TCO 3) Economic profits are equal to
total revenues minus fixed costs.
total revenues minus the costs of raw materials.
total revenues minus the opportunity costs of all inputs.
gross profit minus selling and operating expenses.
(TCO 3) The main difference between the short run and the long run is that
firms earn zero profits in the long run.
the long run always refers to a time period of one year or longer.
in the short run, some inputs are fixed.
in the long run, all inputs are fixed.
(TCO 3) The law of diminishing returns only applies in cases where
there is increasing scarcity of factors of production.
the price of extra units of a factor is increasing.
there is at least one fixed factor of production.
capital is a variable input.
(TCO 3) Marginal cost can be defined as the
change in total fixed cost resulting from one more unit of production.
change in total variable cost resulting from one more unit of production.
change in average total cost resulting from one more unit of production.
change in average variable cost resulting from one more unit of production.
(TCO 3) If the price of a fixed factor of production increases by 50 percent, what effect would this have on the marginal-cost schedule facing a firm?
None, because fixed costs do not affect marginal cost.
Marginal cost would increase by 50 percent.
Marginal cost would increase by less than 50 percent.
Marginal cost would increase by more than 50 percent.