The price of gasoline has increased during the past year. a. Explain why the law of demand applies to gasoline just as it does to all other goods and services. b. Explain how the substitution effect influences gasoline purchases and provide some examples of substitutions that people might make when the price of gasoline rises and other things remain the same. c. Explain how the income effect influences gasoline purchases and provide some examples of the income effects that might occur when the price of gasoline rises and other things remain the same.
> What is a business cycle and what are its phases and turning points?
> Distinguish between real GDP and potential GDP and describe how each grows over time.
> Why does GDP equal aggregate income and also equal aggregate expenditure?
> Define GDP and distinguish between a final good and an intermediate good. Provide examples
> Use the information in Problem 20 to calculate the chained-dollar real GDP in 2014 expressed in 2013 dollars. Problem 20: An economy produces only apples and oranges. The base year is 2013, and the table gives the quantities produced and the prices.
> GDP has proved useful in tracking both shortterm fluctuations and long-run growth. Which isn’t to say GDP doesn’t miss some things. Amartya Sen, at Harvard, helped create the United Nations’ Human Development Index, which combines health and education da
> Answer the following questions. a. Which economy—the Canadian or the U.S.—had the longer and deeper recession in 2008–2009? b. Which economy—the Canadian or the U.S.—had the lower estimated growth rate of potential GDP? c. Why does the news article descr
> India, with the world’s largest population of poor people, created millionaires at the fastest pace in the world in 2007. India added another 23,000 millionaires in 2007 to its 2006 tally of 100,000 millionaires measured in dollars. That is 1 millionaire
> News clip in Problem 22 is as follows: China’s gross domestic product grew 11.4 percent last year and marked a fifth year of double-digit growth. The increase was especially remarkable given that the United States is experiencing a slowdown due to the su
> Oxford analysts report that living standards in Britain are set to rise above those in America for the first time since the nineteenth century. Real GDP per person in Britain will be £23,500 this year, compared with £23,250 in America, but also the U.K.
> The United Nations’ Human Development Index (HDI) is based on real GDP per person, life expectancy at birth, and indicators of the quality and quantity of education. a. Explain why the HDI might be better than real GDP as a measure of economic welfare. b
> An economy produces only apples and oranges. The base year is 2013, and the table gives the quantities produced and the prices. Calculate real GDP in 2013 and 2014 expressed in base-year prices. Quantities 2013 2014 Apples Oranges 60 160 80 220 Pric
> An economy produces only apples and oranges. The base year is 2013, and the table gives the quantities produced and the prices. Calculate nominal GDP in 2013 and 2014. Quantities 2013 2014 Apples Oranges 60 160 80 220 Pricu Apples Oranges 2013 $0.50
> Boeing is producing some components of its new 787 Dreamliner in Japan and is assembling it in the United States. Much of the first year’s production will be sold to ANA (All Nippon Airways), a Japanese airline. Explain how ANA’s activities and its trans
> Boeing is producing some components of its new 787 Dreamliner in Japan and is assembling it in the United States. Much of the first year’s production will be sold to ANA (All Nippon Airways), a Japanese airline. Explain how Boeing’s activities and its tr
> The components and robots for Toyota’s auto assembly lines in Canada are built in Japan. Toyota assembles cars for the Canadian market in Ontario. Explain where these activities appear in Canada’s National Income and Expenditure Accounts.
> In 2014, flow D was $2 trillion, flow E was –$1 trillion, flow A was $10 trillion, and flow C was $4 trillion. Calculate consumption expenditure. HOUSEHOLDS GOVEM TACTOR MAS MARKITS EEST or WORLD EMS
> In 2013, flow A was $1,000 billion, flow C was $250 billion, flow B was $650 billion, and flow E was $50 billion. Calculate investment. HOUSEHOLDS GOVEM TACTOR MAS MARKITS EEST or WORLD EMS
> Classify each of the following items as a final good or service or an intermediate good or service and identify which is a component of consumption expenditure, investment, or government expenditure on goods and services: ■ Banking services bought by Lob
> In Problem 7, a fire destroys some factories that produce gum and the quantity of gum supplied decreases by 40 million packs a week at each price. a. Explain what happens in the market for gum and draw a graph to illustrate the changes. b. If, at the sam
> The following events occur one at a time: (i) The price of crude oil rises. (ii) The price of a car rises. (iii) All speed limits on highways are abolished. (iv) Robots cut car production costs. Explain the effect of each of these events on the market fo
> The demand and supply schedules for gum are: a. Suppose that the price of gum is 70¢ a pack. Describe the situation in the gum market and explain how the price adjusts. b. Suppose that the price of gum is 30¢ a pack. Describe the
> Dairies make low-fat milk from full-cream milk, and in the process they produce cream, which is made into ice cream. The following events occur one at a time: (i) The wage rate of dairy workers rises. (ii) The price of cream rises. (iii) The price of low
> In 2013, the price of corn fell and some corn farmers switched from growing corn in 2014 to growing soybeans. a. Does this fact illustrate the law of demand or the law of supply? Explain your answer. b. Why would a corn farmer grow soybeans?
> Which of the following goods are likely substitutes and which are likely complements? (You may use an item more than once.) coal, oil, natural gas, wheat, corn, pasta, pizza, sausage, skateboard, roller blades, video game, laptop, iPad, cellphone, text m
> The price of food increased during the past year. a. Explain why the law of demand applies to food just as it does to other goods and services. b. Explain how the substitution effect influences food purchases when the price of food rises and other things
> In April 2014, the money price of a litre of milk was $2.01 and the money price of a litre of gasoline was $1.30. Calculate the real price of a litre of gasoline in terms of milk.
> What is the effect on the price and quantity of MP3 players (such as the iPod) if: Any two of the events in questions 1 and 2 occur together? (Draw the diagrams!).
> What is the effect on the price and quantity of MP3 players (such as the iPod) if: More firms produce MP3 players or electronics workers’ wages rise? (Draw the diagrams!).
> What is the effect on the price and quantity of MP3 players (such as the iPod) if: The price of a PC falls or the price of an MP3 download rises? (Draw the diagrams!).
> Why is the equilibrium price the best deal available for both buyers and sellers?
> List all the influences on selling plans, and for each influence, say whether it changes supply.
> What is the law of supply and how do we illustrate it?
> List all the influences on buying plans that change demand, and for each influence, say whether it increases or decreases demand.
> What does the demand curve tell us about the price that consumers are willing to pay?
> What is the law of demand and how do we illustrate it?
> What is the distinction between a money price and a relative price?
> Answer the following questions. a. What would happen to the price of bananas if TR4 spread to Central America? b. What are some of the substitutes for bananas and what would happen to demand, supply, price, and quantity in the markets for these items if
> In the past year, the price of dry-cleaning solvent doubled. More than 4,000 dry cleaners across the United States disappeared as budget-conscious consumers cut back. This year the price of hangers used by dry cleaners is expected to double. a. Explain t
> Cinemas are raising the price of popcorn. Demand for field corn, which is used for animal feed, corn syrup, and ethanol, has increased and its price has exploded. That’s caused some farmers to shift from growing popcorn to easier-to-grow field corn. Expl
> Shoppers bought strawberries in March for $1.25 a pound rather than the $3.49 a pound they paid last year. With the price so low, some growers removed their strawberry plants to make way for spring melons; others froze their harvests and sold them to jui
> In Problem 20, a new dip increases the quantity of potato chips that people want to buy by 30 million bags per week at each price. a. Does the demand for chips change? Does the supply of chips change? Describe the change. b. How do the equilibrium price
> The demand and supply schedules for potato chips are: a. Draw a graph of the potato chip market and mark in the equilibrium price and quantity. b. If the price is 60¢ a bag, is there a shortage or a surplus, and how does the price adjust?
> a. If the price of a pizza is $12, is there a shortage or a surplus and does the price rise or fall? b. Buyers want to pay the lowest possible price, so why would they be willing to pay more than $12 for a pizza? 16 14 12 200 AD0 100 200 Guantily pir
> a. Label the curves. Which curve shows the willingness to pay for a pizza? b. If the price of a pizza is $16, is there a shortage or a surplus and does the price rise or fall? c. Sellers want to receive the highest possible price, so why would they be wi
> With the new way to tap maple trees, farmers could produce 10 times as much maple syrup per acre. Will the new method change the supply of maple syrup or the quantity supplied of maple syrup, other things remaining the same? Explain.
> When a timber mill makes logs from trees it also produces sawdust, which is used to make plywood. a. Explain how a rise in the price of sawdust influences the supply of logs. b. Explain how a rise in the price of sawdust influences the supply of plywood.
> Classify the following pairs of goods and services as substitutes in production, complements in production, or neither. a. Bottled water and health club memberships b. French fries and baked potatoes c. Leather boots and leather shoes d. Hybrids and SUVs
> Think about the demand for the three game consoles: Xbox One, PlayStation 4, and Wii U. Explain the effect of each of the following events on the demand for Xbox One games and the quantity of Xbox One games demanded, other things remaining the same. The
> The money price of a textbook is $90 and the money price of the Wii game Super Mario Galaxy is $45. a. What is the opportunity cost of a textbook in terms of the Wii game? b. What is the relative price of the Wii game in terms of textbooks?
> What are the gains from specialization and trade?
> Why do people specialize and trade?
> Distinguish between comparative advantage and absolute advantage.
> What gives a person a comparative advantage?
> What are the flows in the market economy that go from firms to households and the flows from households to firms?
> Why are social institutions such as firms, markets, property rights, and money necessary?
> What is the opportunity cost of economic growth?
> What conditions must be satisfied if resources are used efficiently?
> What is allocative efficiency and how does it relate to the production possibilities frontier?
> What is marginal benefit? How is it measured?
> What is marginal cost? How is it measured?
> Why does the PPF bow outward and what does that imply about the relationship between opportunity cost and the quantity produced?
> Why is opportunity cost a ratio?
> Inexpensive broadband access has created a generation of television producers for whom the Internet is their native medium. As they redirect the focus from TV to computers, cellphones, and iPods, the video market is developing into an open digital networ
> Answer the following questions. a. How does the discovery of new oil and gas reserves change Canada’s PPF? b. How do technological advances in the production of other goods and services change Canada’s PPF? c. How are Husky’s discoveries changing Canada’
> The table describes the preferences in Yucatan. a. What is the marginal benefit from sunscreen and how is it measured? b. Use the table in Problem 11. What does Yucatan produce to achieve allocative efficiency? Wileg p (klogrom d loed pe Suraaren pe
> In Problem 11, what is the marginal cost of 1 kilogram of food in Yucatan when the quantity produced is 150 kilograms per day? What is special about the marginal cost of food in Yucatan? Problem 11: Suppose that Yucatan’s production po
> Suppose that Yucatan’s production possibilities are: What feature of a PPF illustrates increasing opportunity cost? Explain why Yucatan’s opportunity cost does or does not increase. Food Suracreen kkgam pe no fu p
> Suppose that Yucatan’s production possibilities are: a. Draw a graph of Yucatan’s PPF and explain how your graph illustrates a tradeoff. b. If Yucatan produces 150 kilograms of food per month, how much sunscreen must
> For 50 years, Cuba has had a centrally planned economy in which the government makes the big decisions on how resources will be allocated. a. Why would you expect Cuba’s production possibilities (per person) to be smaller than those of Canada? b. What ar
> Suppose that Tessa buys a new machine that enables her to make 20 jackets an hour. (She can still make only 80 caps per hour.) a. Who now has a comparative advantage in producing jackets? b. Can Sue and Tessa still gain from trade? c. Would Sue and Tessa
> On a graph of the circular flows in the market economy indicate the real and money flows in which the following items belong: a. You buy an iPad from the Apple Store. b. Apple Inc. pays the designers of the iPad. c. Apple Inc. decides to expand and rents
> In an hour, Sue can produce 40 caps or 4 jackets and Tessa can produce 80 caps or 4 jackets. a. Calculate Sue’s opportunity cost of producing a cap. b. Calculate Tessa’s opportunity cost of producing a cap. c. Who has a comparative advantage in producing
> A farm grows wheat and produces pork. The marginal cost of producing each of these products increases as more of it is produced. a. Make a graph that illustrates the farm’s PPF. b. The farm adopts a new technology that allows it to use fewer resources to
> Distinguish between production efficiency and allocative efficiency. Explain why many production possibilities achieve production efficiency but only one achieves allocative efficiency.
> Brazil produces ethanol from sugar, and the land used to grow sugar can be used to grow food crops. The table sets out Brazil’s production possibilities for ethanol and food crops: Define marginal benefit. Explain how it is measured an
> Brazil produces ethanol from sugar, and the land used to grow sugar can be used to grow food crops. The table sets out Brazil’s production possibilities for ethanol and food crops: Define marginal cost and calculate Brazilâ€
> Brazil produces ethanol from sugar, and the land used to grow sugar can be used to grow food crops. The table sets out Brazil’s production possibilities for ethanol and food crops: Does Brazil face an increasing opportunity cost of eth
> Brazil produces ethanol from sugar, and the land used to grow sugar can be used to grow food crops. The table sets out Brazil’s production possibilities for ethanol and food crops: a. If Brazil increases ethanol production from 40 barr
> Brazil produces ethanol from sugar, and the land used to grow sugar can be used to grow food crops. The table sets out Brazil’s production possibilities for ethanol and food crops: a. Draw a graph of Brazil’s PPF and
> The table gives data about umbrellas: price, the number purchased, and rainfall in millimetres (mm). What happens in the graph in Problem 21 if the rainfall increases from 200 mm to 400 mm? Problem 21: Draw a graph to show the relationship between the
> The table gives data about umbrellas: price, the number purchased, and rainfall in millimetres (mm). What happens in the graph in Problem 21 if the price rises and rainfall is constant? Problem 21: Draw a graph to show the relationship between the pric
> Tony and Patty produce skis and snowboards. The tables show their production possibilities. Tony produces 5 snowboards and 40 skis a week; Patty produces 10 snowboards and 5 skis a week. a. Who has a comparative advantage in producing (i) snowboards an
> Calculate the slope across the arc AB.
> The spreadsheet provides data on oil and gasoline: Column A is the year, column B is the price of oil (dollars per barrel), column C is the price of gasoline (cents per litre), column D is oil production, and column E is the quantity of gasoline refined
> The spreadsheet provides data on oil and gasoline: Column A is the year, column B is the price of oil (dollars per barrel), column C is the price of gasoline (cents per litre), column D is oil production, and column E is the quantity of gasoline refined
> The spreadsheet provides data on oil and gasoline: Column A is the year, column B is the price of oil (dollars per barrel), column C is the price of gasoline (cents per litre), column D is oil production, and column E is the quantity of gasoline refined
> Calculate the slope at point A and at point B.
> Calculate the slope of the curve in the figure in the next column at point A. 10
> Draw a graph that shows the relationship between the two variables x and y: Calculate the slope of the relationship across the arc as x increases from 4 to 5. * D 1 2 3 45 25 24 22 18 12 0
> Draw a graph that shows the relationship between the two variables x and y: Calculate the slope of the relationship between x and y when x equals 3. * D 1 2 3 45 25 24 22 18 12 0
> Draw a graph that shows the relationship between the two variables x and y: a. Is the relationship positive or negative? b. Does the slope of the relationship become steeper or flatter as the value of x increases? c. Think of some economic relationships
> The table gives data about umbrellas: price, the number purchased, and rainfall in millimetres (mm). Draw a graph to show the relationship between the price and the number of umbrellas purchased, holding the amount of rainfall constant at 200 mm. Descri
> Kim can produce 40 pies or 400 cakes an hour. Liam can produce 100 pies or 200 cakes an hour. a. Draw a graph of Kim’s PPF and Liam’s PPF and show the point at which each produces when they spend 30 minutes of each hour producing pies and 30 minutes prod
> Draw a graph of two variables whose relationship shows (i) a maximum and (ii) a minimum.
> Explain how we “read” the three scatter diagrams in Figs. A1.3 and A1.4. FIGURE A1.3 A Scatter Diagram Tickah DVD Movie lioal kon Man 3 50 1.1 1.3 The Hanger Gomar: Catting fire 49 20 Despkable Me 2 45 1.8 Man of
> Explain how we “read” the three graphs in Figs. A1.1 and A1.2. FIGURE A1.1 Making a Graph D end 1419 ocand -20 20,0. parahun Paite FIGURE A1.2 Two Graphs of Economic Data 1 per e and 112 milee EVeid In 2013, 1.3 b
> What are the two ways of calculating the slope of a curved line?
> Provide two microeconomic statements and two macroeconomic statements. Classify your statements as positive or normative. Explain why.
> Look at today’s National Post. What is the leading economic news story? With which of the big economic questions does it deal and what tradeoffs does it discuss or imply?
