#Credits: 3.0
Instructor’s
Name:
Michael Heslop
Office:CS Bldg-RM-216C
Telephone# :(703)-323-3254
E-Mail
Address:
MHeslop@nvcc.edu
Mailbox: CS 232
Semester/Year: Fall 2001
Classroom/Time:T/TH:11:00AM-12:15PM(RM
CT-315)
Candidates
are required to do any three (3) questions from the sections below. Each of
your three (3) questions must be chosen from any three (3) different sections
of the eight (8) sections below.
Candidates
are also required to use appropriate diagrams where necessary to elucidate
their answers.
Section#1-Scarcity,
Resource Allocation and Principles of Microeconomics
(1a)
State and explain any four (4) Principles of Microeconomics with which you are
familiar
(1b)What
is the central problem of microeconomics?
(1c)Does
the Market or Price mechanism contribute to the alleviation of the central
problem of microeconomics identified in (1b) above? Why or Why not?
(1d)What
is the difference between economic efficiency and equity?
(2a)State and explain the central differences between any three (3) Principles of Microeconomics with which you are familiar
(2b)State
and explain three (3) differences and three (3) similarities between the Market
or Price Mechanism and the Central Planning or Command mechanism in their
allocation of scarce resources
(2c)In
your opinion which of the two (2) mechanisms used to allocate scarce resources
identified in Q#(2b) above contributes more to the central problem of economics?
Why
or
Why not?
Section#2-The
Scientific Method and Economics-Economics as Art or Science?
(3a)What
is Microeconomics?
(3b)Why
is Microeconomics different from Macroeconomics?
(3c)Does
your answer in Q#(3b) above justify why Microeconomics is a separate discipline
from Macroeconomics?
(3d)What
is the Scientific Method?
(3e)How
does the use of the scientific method by Microeconomists make Microeconomics a
science?
(4)Distinguish
between the following pairs of concepts:
(a)Assumptions
and Models
(b)Theory
and Hypothesis
(c)Observation
and Scientific Method
(d)Social
science and Physical Science
(e)Deductive
and Inductive method
(f)Scientific
Method and Models
Section#3-The
Effect of Price and Non-Price Factors on Demand and Supply
(5a)What
is the difference between a market and a marketplace?
(5b)How
does market demand differ from market supply?
(5c)How
does individual demand differ from market demand?
(5d)Derive
the market demand for celluar- phones in three (3) households in the City of Annandale-Be sure to assign your own market
prices and quantities of cellphones demanded at each price-Clearly labeled
diagrams must be used in
your derivation of the market demand
(6a)With
the use of clearly labeled diagrams explain how any three (3) of the
following non-price factors are likely
to affect the supply or demand for child care services or nursery services:
·
Cost
of qualified care givers (nurses, baby sitters, teachers etc)
·
Changes
in technology
·
Prices
of related services
·
Government
Fiscal or Monetary Policy
·
Natural
disasters
·
Advertising
·
Changes
in consumers taste and preferences
·
An
increase in consumers’ income
·
An
increase in the price of child care services
(6b)With
the use of clearly labeled diagrams distinguish between the following concepts:
·
A
change in quantity demanded and a shift in demand
·
A
change in quantity supplied and a shift in supply
·
The
Law of Demand and the Law of Supply
·
Ceteris
Paribus and Non-Price factors or determinants
(7a)State
and briefly explain any two (2) determinants of the elasticity of demand and
supply
(7b)What
is the definition of a “tax incidence”?
(7c)Why
is a “tax incidence” important to economic agents?
(7d)With
the use of clearly labeled demand/supply diagrams identify the economic
agent(s) who bears or bear the tax burden in the following situations:
·
A
10% tax is imposed on the price of each carton of Parliament cigarettes that
are produced and the manufacturers of these cigarettes are known to have a
perfectly inelastic supply curve whereas the consumers of Parliament cigarettes
are known to have an elastic demand
·
A
10% tax is imposed on the price of basketballs sold in the market bearing the
signature of Michael Jordan. The sports store selling (suppliers) the basket
balls has an elastic supply curve and the consumers (basket ball fans) are
known to have an inelastic demand curve for basket balls
·
Now
evaluate who (consumers or suppliers or both) in the above scenarios will bear
the tax burden as a result of the following changes:
·
(a)The
demand curve in Q#6d part (1) above is now relatively inelastic and the supply
curve is now relatively elastic
·
(b)
The supply curve in question Q#6d part (2) above is now Perfectly elastic and
the demand curve remains relatively inelastic
(8)With
the use of carefully labeled diagrams distinguish between the following pairs
of concepts:
(a)Price
elasticity of demand and inelastic demand
(b)Cross
elasticity of demand and Perfectly inelastic supply
(c)Relatively
inelastic demand and Relatively elastic demand
(d)Tax
incidence and Income elasticity of demand
(e)Cross
elasticity of supply and Elasticity of demand
(f)Unitary
elastic demand and Unitary elastic supply
(9a)Provide
an analysis for the effect of a price change on the total revenue of the firms
and consumers with the following elasticities:
(a)A
medical center that provides liver transplants to patients in a city who have
an inelastic demand for this service-Scenario#1-The medical center increases
the price of live transplants from $1575 to $2500
(b)A
supplier of turtle meat has customers who have an elastic demand for her
product-Scenario#2-The turtle meat supplier increases the price of turtle meat
from $3.50/lb to $3.85/lb.
(c)Celery
farmers supply their commodity to consumers in a market where the demand for
celery is perfectly elastic and the price rises from $.75/lb to $.87/lb
(d)A
firm supplies mangoes in the short run to its customers decreases its price for
its product from $5.50 per dozen to $3.75 per dozen
(9b)What
is the difference between elasticity of demand for Korbel wine and price
elasticity of supply for Korbel wine?
(10)With
the use of clearly labeled diagrams distinguish between the following pairs of
concepts for a firm or industry:
(a)Short-Short
Run Total Cost and Long Run Total Variable Cost
(b)Short-Run
Total Variable Cost and Short-Short-Run Average Fixed Cost
(c)Long
Run Marginal Cost and Long Run Average Variable Cost
(d)Increasing
Returns to Scale and Diseconomies of Scale
(e)Constant
Returns to Scale and Production function
(f)Cost
function and Short-Run Average Cost Curve
(11a)What
is the Law of Diminishing Marginal Returns?
(11b)Is
it possible that the law of Diminishing Marginal Returns could occur in the
long run or the Short-Short Run? Why or Why not?
(11c)Do
firms and industries have marginal cost in the Short-Short Run?
(11d)With
the use of clearly labeled diagrams illustrate the following scenarios:
1.
The
determination of market prices in the Short-Short-Run
2.
The
determination of market prices in the Short-Run
3.
The
determination of market prices in the Long Run
4.
The
relationship between the Total Product or Total Output curve at its maximum
point and its Marginal Product curve in the short run
(12a)What
is the concept of a firm’s Long Run Average Cost curve?
(11b)What
is the relationship between an industry’s Short-Run Average Cost and its Long
Run Average Cost curves?
(11c)With clearly labeled diagrams derive the LRAC curve of a firm or an industry
(11d)With
the use of diagrams illustrate the portions of a firm’s or industry’s LRAC
curve that demonstrates (a) Increasing Returns to Scale (b) Diseconomies of
Scale and (c)Decreasing Returns to Scale
(12a)State
and explain any three (3) similarities and any three (3)
differences between oligopoly and monopoly markets
(12b)Give
any two (2) examples of oligopoly industries in the USA and any two (2)
international examples of oligopoly industries
(12c)Give
any two (2) examples of monopoly industries in the USA and any two international examples of monopoly
industries
(13a)
What is meant by Price discrimination?
(13b)State
and briefly explain the assumptions for the Price discriminating monopolist
model
(13c)With
the use of carefully labeled diagrams explain how a monopolist firm practices
price discrimination in any two markets of your choice
(14a)What
is the purpose of the Kinked Demand Curve Model?
(14b)With
the use of clearly labeled diagram illustrate how the Kinked Demand Curve Model
explain collusive behavior of oligopolist firms to achieve price stability?
(15a)With
the use of clearly labeled diagrams distinguish between each of the following
pairs of concepts:
1.
The
Pricing Policy of an unregulated monopolist firm and Marginal Cost Pricing
Policy
2.
Average
Cost Pricing and Marginal Cost Pricing Policies
3.
The
Pricing Policy of an unregulated monopolist firm and Average Cost Pricing
Policy
(15b)Does
Marginal Cost Pricing benefit the monopolist firm more than the consumer or
vice versa? Why or Why not?
(15c)Does
monopolist pricing without regulation benefit the consumer more than the
monopolist firm or vice versa? Why or Why not?
(16)Distinguish
between the following pairs of concepts:
(a)Cardinal
Utility and Ordinal Utility
(b)Utility
and Indifference Curve
(c)Budget
line and Indifference Curve
(d)Consumer
equilibrium and Marginal Rate of Substitution
(e)Engels
Curve and Price Consumption Curve
(f)Income
Consumption Curve(ICC) and Price Consumption Curve(PCC)
(g)Slope
of Budget line and Slope of Indifference Curve
(h)Rotation
of a Budget line and a Shift in a budget line
(i)Individual
demand curve and Utility curve
(17a)What
is meant by a consumer’s Price Consumption Curve?
(17b)What
is the difference between a consumer’s Price consumption Curve and his/her
Income Consumption Curve?
(17c)With
the use of clearly labeled diagrams derive a consumer’s demand curve from
his/her Price Consumption Curve
(18a)What
is meant by the term “Consumer Equilibrium”?
(18b)With
the use of clearly labeled diagram illustrate the concept of consumer
equilibrium in Q#(18a) above
(18c)With
reference to your diagram in Q#(18b) above clearly explain why a consumer would
not be in equilibrium at points where his/her indifference curve cuts or
intersects his/her budget line
(19a)With
the use of a suitable diagram explain what is meant by a consumer’s
indifference curve?
(19b)What
is the difference between a consumer’s indifference curve and her Engels curve?
(19c)State
and explain any three (3) properties of a consumer’s indifference curve
(19d)With
the use of the appropriately labeled diagram explain why indifference curves
cannot intersect each other?
Section#8-The Economics of Factor
Resource Markets
(20a)What
are factor resource markets?
(20b)What
are product markets?
(20c)What
is the relationship between factor resource and product markets in an economy?
(20d)Why
are factor resource markets important in an economy?
(20e)How
are factor resources priced in competitive and non-competitive factor markets?