Liberty
University ECON 213 Problem Set 1 solutions answers right
1.
Based
on the information provided below for the market for video games, answer the
following questions:
|
PRICE
|
Q
DEMANDED
|
Q
SUPPLIED
|
|
$50
|
5
|
9
|
|
$45
|
7
|
7
|
|
$40
|
9
|
5
|
|
$35
|
11
|
3
|
|
$30
|
13
|
1
|
a.)
Draw
and properly label the demand and supply graphs (this means you must label the
axes and any lines you include on the graph).
b.) What is the equilibrium price and quantity?
PRICE:
______________________ QUANTITY:
______________________
Now,
assume that a new government report claims that video game play stimulates the
brain.
c.)
What
will this do to the demand curve? Of the list of things in the text that cause
a change in demand, which best fits here as the cause of the demand shift?
d.) What will happen to the equilibrium price
and quantity?
P:
_______________________ Q:
_______________________
2.
Based
on the information provided below for the state of Montana, answer the
following questions:
|
CHOICE
|
OIL
/ barrels
|
WHEAT
/ bushels
|
|
A
|
5000
|
0
|
|
B
|
4500
|
10000
|
|
C
|
2500
|
20000
|
|
D
|
0
|
25000
|
a.)
Draw
the Production Possibilities Curve.
b.) Determine the opportunity costs for a move
from A to B; B to C; and C to D.
A
to B: _____________ B to C:
__________________ C to D:
_________________
3.
In the
space provided below, do the following:
a.)
Draw
and properly label a demand and supply curve.
b.) Indicate where the equilibrium Price and
Quantities are located.
c.)
How do
things change based on the following scenario?
·
The
market for hybrid cars is changing. There are more providers but due to bad
publicity and poor performance, demand is falling.
Knowing
this information, answer the following questions and then show the corresponding information in your graph:
4.)
What
is the market you are dealing with?
5.)
Which
curve(s) change(s)? Based on the lists in the text of what causes demand and
supply to shift, what are the causes of these shifts?
6.)
In
what direction do they change?
7.)
What
happens to the equilibrium price and quantity after these changes are put into
effect? Do they go up, go down, or stay the same?
P: _______________________ Q: _______________________
4.
Mario
has reached a crossroads in his life. He is trying to decide whether to change
careers. Currently, Mario makes pizzas,
but he is considering entering a different line of work testing video games. Mario
can either test 6 games or toss 12 pizzas in a day. Interestingly, Mario’s
friend Luigi is in a similar predicament. Luigi can test 3 games or toss 2
pizzas during a day.
Mario’s
opportunity cost of testing one game: ___________________________
(yes,
you can test fractional games)
Luigi’s
opportunity cost of testing one game: ___________________________
(yes,
you can test fractional games)
Mario’s
opportunity cost of tossing one pizza: ___________________________
(yes, you can have fractional pizzas)
Luigi’s
opportunity cost of tossing one pizza: ___________________________
(yes,
you can have fractional pizzas)
Who
has an absolute advantage in testing games? ________________________
Who
has the comparative advantage in testing games? _____________________
Who
has the comparative advantage in making pizzas? _____________________
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