MICROECONOMICS HOMEWORK ASSIGNMENT 2021
PART 1: Answer the following questions. (5 percent each)
1) List the three main forms of business ownership.
2) What is the law of demand? What is the law of supply?
3) List the four levels of competition in markets.
4) What is the difference between a labor strike and a lockout?
PART 2: Problems. Show your work. (10 percent each)
1) Accounting and Economic Profit: Figure out the accounting and economic profit based on the following information. A person decided to go to an expensive private four year college. They took out loans that totaled $80,000 with a monthly repayment amount of $830 based on the interest rate they received and a ten year repayment. They obtained employment in the field they wanted with an annual gross income of $60,000. This person could have went to a state university and taken out $20,000 total of student loans that would have a monthly repayment of $207 and obtained employment in their field with a different company that would pay an annual gross income of $55,000. Based on this information calculate both their accounting profit and also their economic profit for one year. (Note: for this problem we are using gross income and ignoring the 77,000 + page IRS code.)
2) Price Elasticity: Use the following equation to answer the problem and identify if the answer represents either elastic, inelastic, or unit elastic
Percentage Change in Quantity
Ed = Demanded of Product X
_____________________
Percentage Change in Price
of Product X
A) The price of movie tickets increases 8.5% and quantity demanded decreases by 11.5%.
Ed=
B) The price of pizza decreases by 5% and quantity demanded increased by 3.5%.
Ed=
C) The price of wheat increases by 4.25% and quantity demanded decreases by 4.25%.
Ed=
3) Economics of Taxation:
A) If a student who files their tax return receives the American Opportunity Tax Credit for $2,500, and they are in the 15% tax bracket, then what is their tax savings?
B) If a taxpayer who files their tax return receives a tax deduction for $10,000 and they are in the 15% tax bracket, then what is their tax savings?
4) Global Economy: Complete the following table by indicating if the U.S. dollar appreciated or depreciated against the selected currencies of the time frame given. The values in the table represent how much one U.S. dollar is compared to the other currencies.
Currency
8/10/10
4/26/13
U.S. dollar
Appreciate or Depreciate
Euro
Mexican Peso
Japanese Yen
Canadian Dollar
U.K. Pound
.76
12.67
85.77
1.04
.63
.77
12.16
97.94
1.02
.65
____________
____________
____________
____________
____________
PART 3: Short answer. Answer the following using complete sentences. (10 percent each)
1) Supply and Demand: Use the following graphs to answer A thru D.
A-B) For each graph, explain a market situation that will explain the shift. Also explain the result of the shift for equilibrium price and quantity.
2) Competition Level: Given the following information that was found on the internet for the cereal industry, identify which level of competition this would be classified as, and explain why. Identify and explain if the products are standard or differentiated. Explain based on the level of competition what non-price competition there is such as advertising, etc. (Note: since private label is #4, use Quaker as the 4th largest in this industry.)
3) Global Economy: List and explain the three main barriers to trade that a government can put in place. Include in your answer why they would do this and how each barrier would impact trade.
4) Economic Systems: Compare and contrast the main differences between a market system and a command system.
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