Solution-What is the opportunity cost for producing a pair

What is the opportunity cost for producing a pair of shoes

Assignment Help Microeconomics

Reference no: EM131025326

Practice Questions 2-

I. Binary Choices:

1) A market is a place where a group of sellers gather to decide on the price of the goods they will sell.

a. True

b. False

2) In all competitive markets participants take the price as given

a. True

b. False

3) The law of demand states that there is an inverse relationship between the quantity demanded and the price of a good, everything else held constant.

a. True

b. False

4) As income rises, the quantity demanded of a given good must increase.

a. True

b. False

5) A fall in the price of a ________ increases the demand for the other good and shifts the demand curve to the right for the other good.

a. Complement

b. Substitute

6) An expected rise in the price of gasoline will definitely lead to a decrease in the equilibrium quantity.

a. True

b. False

7) If the price of paper goes up, the quantity demanded in the market for books will:

a. increase

b. decrease

8) Because of increased access to the internet and the invention of numerous pirate software download programs, which make almost all software available for free download, the price of software will

a. go down.

b. change in an indeterminate way.

9) If the government imposes an effective price floor on the market for milk in Wisconsin, a ______ for milk will result.

a. Shortage

b. Surplus

10) A price ceiling is usually introduced to increase the ________ welfare in the particular market.

a. Consumer

b. Producer

II. Problems:

11) John and Kate both work in a Mexican restaurant. The following table displays the time it takes them to produce 1dozen Burritos and Tacos.

	Time to produce 1 dozen
	Burritos	Tacos
John	4 hrs	2 hrs
Kate	2 hrs	3 hrs

a. What is the opportunity cost of producing one dozen Burritos for Kate? For John?

b. What is the opportunity cost of producing one Taco for Kate? For John?

c. Who has an absolute advantage in producing Burritos and who has an absolute advantage in producing Tacos?

d. Who has a comparative advantage in producing Burritos and who has a comparative advantage in producing Tacos?

12) Bulgaria and Italy have 5 and 10 factories for shoes respectively. Each factory could produce only shoes or sandals. The table below indicates the maximum production possible for each country per factory when it devotes all of its available resources to either shoe or sandal production (e.g., Bulgaria can produce 10 pairs of shoes and 0 pairs of sandals per factory).

	Pairs of Shoes	Pairs of Sandals
Bulgaria	10	20
Italy	4	12

a. On separate graphs, graph the PPF for Bulgaria and Italy. Assume the PPF for both countries is linear with constant slopes. Also assume Shoes are the y-variable and sandals are the x-variable.

b. What is the opportunity cost for producing a pair of shoes in Bulgaria? In Italy?

c. What is the opportunity cost for producing a pair of sandals in Bulgaria? In Italy?

d. Which country has the comparative advantage in producing shoes and which in sandals?

13) Suppose the demand and supply curve for new mopeds in Madison is:

Q_d = 8000- 5P_d

Q_s = 4P_s - 1000

a. Draw the Supply and the Demand curves and find the equilibrium price and quantity.

b. Calculate consumer surplus, producer surplus, and the dead-weight loss.

c. List three possible reasons for the Demand to shift leftwards.

d. Suppose that this year the winter in Wisconsin is expected to be very severe and long lasting. The new demand curve will be Q_d = 3000- P_d. Calculate the new consumer surplus, and the new producer surplus. Show the corresponding areas in the diagram you draw.

e. To protect the local producers of mopeds the government decides to introduce a price floor at $1000 by buying the surplus. Calculate the amount of the surplus the government will buy and the cost to the government of buying this surplus.

f. Calculate the new consumer surplus, the new producer surplus and the dead-weight loss due to the imposition of this price floor. Show the corresponding areas in the diagram you draw.

14) The US is one of the biggest producers of SMGs in the world. The following table summarizes the World supply and demand for SMGs.

Price	US Q_d	US Q_s	Rest of the World Q_d	Rest of the World Q_s
$ 100	1200	0	800	0
$ 200	1000	200	600	400
$ 300	800	400	400	800
$ 400	600	600	200	1200
$ 500	400	800	0	1600

a. What will be the equilibrium price and quantity of SMGs in the US if there is no international trade?

b. What is producer surplus and consumer surplus in the US if there is no trade?

c. Suppose now that international trade is allowed. What will happen to the equilibrium price in the US? What is the level of the world price? How does it compare to the prices before trade?

d. How much SMGs will the US produce with trade? Will SMGs be imported or exported? How much?

e. What are the levels of consumer and producer surplus in the US after the trade? How do the new values compare to the values before trade?

f. Who benefits from trade, and who is hurt for the trade in this example? Why?

Reference no: EM131025326

Questions Cloud

Find one scholarly source and one popular source : 1.Start your post by stating a clarified research problem/research question on a topic of your choice for us to review and give you comments on.

What would the dimension of the null space of a^t : Also, if you let B be a 6 x 6 invertible matrix, what would dim(N(BA)^orthogonal complement) and dim(C(A^TB^T)^orthogonal complement) be? (C( ) is the column space)

Detailed analysis of any one of seven marketing mix element : Detailed analysis of any one of the seven marketing mix element pertaining to that service experience. Clear and detailed explanation of the service experience.

Redraw the container to show what it might look like : You have a sample of gas in a container with a movable piston, such as the one in the drawing. Redraw the container to show what it might look like if the temperature of the gas is increased from 300 K to 500 K while the pressure is kept constant.

What is the opportunity cost for producing a pair of shoes : On separate graphs, graph the PPF for Bulgaria and Italy. Assume the PPF for both countries is linear with constant slopes. Also assume Shoes are the y-variable and sandals are the x-variable. What is the opportunity cost for producing a pair of ..

Find the matrix of the adjoint of t with respect to basis : Find the matrix of the adjoint of T with respect to the basis .

Determine the present value of the lease payments : What pretax amounts related to the lease would Georgia-Atlantic report in its balance sheet at December 31, 2013? (Enter your answers in whole dollars.)

How much farther will a ball travel for each mile-per-hour : How much farther will a ball travel for each mile-per-hour increase in the speed of the bat?

Principal operating departments : Use the direct method to allocate support costs to each of the two principal operating departments, Engineering and Computer Sciences. Prepare a schedule showing the support costs allocated to each department.

User Account

All Pages

What is the opportunity cost for producing a pair of shoes

Reference no: EM131025326

Reference no: EM131025326

Questions Cloud

Reviews

Write a Review

Microeconomics Questions & Answers

Choose a good which you are familiar with write down the

Operatingin a purely competitive market

Using geert hofstede dimension of culture

Why the difference in profit margins

In the context of shareholder wealth-maximization model of

Marginal productivity and marginal utility

Suppose virginia withdrew 10000 from her bank if the

Difference between a progressive and a regressive tax

Define verage hourly wage,output and annual overhead cost

European standard far less than that of us following wwii

Strategies based on fiscal and monetary policy

Exposure to currency risk

Assured A++ Grade

Academics

Major Subjects

Majors

Get In Touch

TERMS & POLICIES

HELP & SUPPORT