all questions please dont miss any answer with graphic PRACTICE EXERCISE-OPPORTU

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all questions please dont miss any answer with graphic

PRACTICE EXERCISE-OPPORTUNITY COST & MARGINAL ANALYSIS . Indicate whether each of the following statements applies to microeconomics or macroeconomics: a. The unemployment rate in the United States was 8.1 percent in August 2012. b AUS, software firm discharged 15 workers last month and transferred the work to India. c. An unexpected freeze in central Florida reduced the citrus crop and caused the price of oranges to rise. d.U.S. output, adjusted for inflation, decreased by 2.4 percent in 2009 e. Last week Wells Fargo Bank lowered its interest rate on business loans by one-half of I percentage point. f.The consumer price index rose by 3.8 percent from August 2011 to August 2012. 2. Suppose that you initially have $100 to spend on books or movie tickets. The books start off costing $25 each and the movie tickets start off costing S10 each. For each of the following situations. would the attainable set of combinations that you can afford increase or decrease? Your budget increases from S100 to $150 while the prices stay the same. Your budget remains $100, the price of books remains $25, but the price of movie tickets rises to S20. Your budget remains $100, the price of movie tickets remains $10, but the price of a book falls to $15 Suppose that you are given a S100 budget at work that can be spent only on two items: staplers and pens. If staplers cost S10 each and pens cost $2.50 each, then the opportunity cost of purchasing one stapler is: a. 10 pens a. b. c. 3. C. zero pens. 4. For each of the following situations involving marginal cost (MC) and marginal benefit (MB) indicate whether it would be best to produce more, fewer, or the current number of units. 3,000 units at which MC $10 and MB = $13. 43,277 units at which MC-S99 and MB S99, 5 units at which MB

Explanation / Answer

1. Microeconomics studies economic relationships or economic problems at the level of an individual. Eg. An individual firm, an individual household, individual consumer. It is concerned with determination of output and price for an individual firm or industry. Study of microeconomics assumes that macro variables remains constant.

Macroeconomics studies economic relationships or economic problems at the level of economy as a whole. It is concerned with determination of aggregate output and general price level in the economy as a whole. It assumes that micro variables remain constant.

a) Macroeconomics

b) Microeconomics because only one firm discharged workers

c) Microeconomics

d) Macroeconomics

e) Macroeconomics

f) Macroeconomics, price index is a macroeconomic concept.

2. a) Attainable combinations increases because person income increases by 150 - 100 = $ 50 which can be used to purchase any of the good.

b) Increase in the price of movie ticket keeping all other constant decreases attainable combination because with same income, consumer is able to consume less movie tickets.

c) Decrease in the price of book increases the attainable combinations because consumer can consume more goods with the same income

3. Cost of 1 stapler = Cost of 4 pens as 2.50 x 4 = 10 = Cost of stapler

Opportunity cost is the value of next best alternative foregone.

To purchase 1 more stapler, person has to give up 4 pens.

So, answer is d) 4 pens

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