Reference no: EM132496036
BUS 201 Microeconomics - Emirates College of Technology
Problem 1. Choose the right answer for each of the following:
1. When setting a Production Possibilities Frontier, which of the following assumptions is NOT made?
a) The economy produces only two goods or two types of goods.
b) Firms produce goods using all available factors of production.
c) The technology available to firms is given
d) The quantities of the factors of production that are available are increasing over the relevant time period.
2. If the demand for good X shifts to the right as the price of good Y rises, then goods X and Y are:
a) Inferior goods.
b) Complementary goods.
c) Normal goods.
d) Substitute goods.
3. If Faris earns AED 150 an hour and he leaves work for 2 hours to go and watch a football match costing him AED 70 to buy a ticket, what is his opportunity cost of not being at work?
a) AED 70
b) AED 150
c) AED 300
d) AED 370
4. When the society cannot produce all the goods and services people wish to have, then the economy is experiencing:
a) Inefficiencies.
b) Scarcity.
c) Inequalities.
d) Surpluses.
5. As a factor of production, capital means:
a) The finances necessary for firms to produce their products.
b) Buildings and machines used in the production process.
c) The money households use to purchase firms' output.
d) Stocks and bonds
Problem 2. Answer the following Problems:
A. Within the scope of the definition of economics, discuss the meaning of the economic problem.
B. Discuss how the concept of trade-off is related to the concept of scarcity.
C. Discuss how the concept of opportunity cost is related to the concept of production possibilities frontier.
Problem 3. Use the information in the table below to calculate the opportunity cost of moving from one production point to another:
|
Production point
|
Rice (ton)
|
Clothes (Units)
|
|
A
|
0
|
30
|
|
B
|
2
|
28
|
|
C
|
4
|
24
|
|
D
|
6
|
18
|
|
E
|
8
|
10
|
|
F
|
10
|
0
|
1) Movement from A to B
2) Movement from C to D
3) Movement from D to E
4) Movement from E to D
Problem 4. The following table is a demand and a supply schedule for flashlights.
|
Price
AED
|
Quantity
Demanded
(1000 units)
Per Month
|
Quantity
Supplied
(1000 units)
Per Month
|
|
1
|
14
|
2
|
|
2
|
12
|
4
|
|
3
|
10
|
6
|
|
4
|
8
|
8
|
|
5
|
6
|
10
|
Using the table above, respond to the following:
a. Plot the demand and supply curves for the flash lights market and label the axes and each curve.
b. On the graph, show where the equilibrium price and quantity.
c. What is the equilibrium price?
d. What is the equilibrium quantity?
e. At the equilibrium price, is there a surplus or shortage and how much is it. Zero
f. At price AED 2, answer the following:
1. Is there a surplus or shortage
2. From Problem 1 above, how much is this surplus or shortage?
3. In this case, will the price increase or decrease?
g. At price AED 5, answer the following:
1. Is there a surplus or shortage? Surplus
2. From Problem 1 above, how much is this surplus or shortage?
3. In this case, will the price increase or decrease? Decrease
Note: Need to do problem 2 only part A & B & C
Attachment:- Microeconomics.rar