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Sample Questions

Sample questions

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MASTERPIECE2020

Economic forecasts

You are in charge of making recommendations based on economic forecasts to uppermanagement of your firm, which produces widgets and employs 2,500 workers. Uppermanagement has informed you that they are planning to build a new facility and hire 500 additional workers. They would like you to research leading indicators and produce a detailed analysis of where the economy is heading in the next 6 months. What would you look for in terms of leading indicators (discuss at least three indicators), and what recommendations would you make to uppermanagement based on your findings regarding leading indicators? Be sure to consider the macroeconomic nature of leading indicators, and the microeconomic nature of your firms’ decisions

 

Next

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 two or three brief paragraphs.) (15 points)

(Part B) 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. (10 points)

(Part C) 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 $200 billion.

 

Third:

 

(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. (20 points)

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

(Part A) Refer to the above data. If the product price is $70, 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. (10 points)

(Part B) 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.

 

Fourth

The supply and demand schedules for tickets to basketball games in town of Oakwood are given in the table below. (20 points)

Price Quantity Demanded Quantity Supplied
$6 3,000 3,000
7 2,500 3,000
8 2,000 3,000
9 1,500 3,000
10 1,000 3,000

The stadium owners need to find the optimum price for the games.

(Part A) What are the coefficients of elasticity of supply and demand if the price is raised from $6 to $8? (8 points)

(Part B) Characterize the demand and supply for tickets based on the calculated elasticities. (4 points)

(Part C) What is the optimum price that the stadium owners can set for the tickets? (4 points)

(Part D) Why is the selected price for the tickets better than other prices given in the table above?

 

 

You have been hired to manage a small manufacturing facility whose cost and production data are given in the table below. (20 points)

Workers Total Labor Cost Output Total Revenue
1 $100 50 $150
2 $200 175 $275
3 $300 275 $355
4 $400 355 $425
5 $500 425 $485
6 $600 485 $535
7 $700 525 $575

Based on your knowledge of marginal analysis, how many workers should you hire? Explain

 

 

 

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. (20 points)

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

(Part A) Refer to the above data. If the product price is $70, 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. (10 points)

(Part B) 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