Test 1: Take home portion

Test 1: Take home portion
1.    Answer every question in your own words. If asked draw graphs and include them in answers. Please type answers and if possible insert drawings of graphs into document. Please provide a .doc or .docx file with submission even if turning in take home test in class. Submit test to me via email ([email protected]) no later than TUESDAY October 13nd at 11:59 pm.
2.    If asked supply, demand or ppf questions. Draw the graph, explain what happens to the curves (do they shift inwards or outwards). Indicate where equilibrium price and quantity started and where it finally ends up. Indicate where both price and quantity have changed (gone up, down, indeterminate).
3.    If using other sources please site APA style or MLA style with in text citations and a works cited page.
4.    Name your file with your last name, then first, and then test one. For example I would name my test buckracheltest1.doc

1.    What would you need to figure out the opportunity cost of a postgraduate backpacking trip through Europe?
2.    US produces airplanes. It takes the US 10,000 hours of labor and pants take 2 hours of labor. Korea takes 40,000 hours to produce a plane and 4 hours to produce pants.
a.    Draw the PPF’s for both countries
b.    Explain who has comparative advantage and absolute advantage.
c.    Show on the PPFs feasible production points, inefficient production points, and impossible production points.
d.    Show the opportunity costs and who specializes in what.
e.    What price would the countries trade at?
f.    Suppose Korea catches up with US productivity so that they can produce a plane at 10,000 hours, what pattern of trade would be predicted now?
3.    Consider the markets for mp3s, cds, and concert ticket prices.
a.    For each pair, identify whether they are compliments or substitutes, explain your answer.
i.    Mp3 and CDs
ii.    Mp3 and concert tickets
iii.    Cds and concert tickets
iv.    Are any of these normal goods/inferior goods?
b.    Suppose concert tickets become cheaper, show what happens graphically on the supply and demand curve (really think about this).
c.    Draw two more diagrams to show how changes in the price of concert tickets affect the market for cds and mp3s.
4.    Use the BLS website and the BEA website (http://www.bls.gov/data/    & http://www.bea.gov/iTable/index_nipa.cfm   ) to find data for 2013-2015 (hint GDP price index and CPI). Find inflation using both GDP price index and CPI. Graph using excel and tell me whether the GDP deflator measure of inflation is better or worse than the CPI measure of inflation. How does the GDP data differ from the CPI data? Include your graph.
5.    Why is it desirable to have a large GDP? Give an example of something that would raise GDP and yet be undesirable.

BONUS:  Describe what you would do to promote economic growth in Somalia, think of chapters 2, 3, 4, 10, 11 and 12 when answering this.

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