7.3 Midterm Exam_ ECON 161-01P Microeconomics

pdf

School

Herzing University *

*We aren’t endorsed by this school

Course

161

Subject

Economics

Date

Jun 14, 2024

Type

pdf

Pages

Uploaded by fransochieng

7.3 Midterm Exam Due Jun 8 at 11:59pm Points 60 Questions 23 Time Limit None Instructions Attempt History Attempt Time Score LATEST Attempt 1 199 minutes 58 out of 60 Score for this quiz: 58 out of 60 (Devote about 4 hrs.) Overview Instead of your regular Prepare assignment, this week you will have a chance to prove everything you have been learning so far. Many of the questions on this exam are related to examples that we have discussed in class or that you have completed as part of the Prepare materials, so take the time to go through your notes and old Prepare assignments to review everything you have been learning. Instructions Review your assignments and materials from Weeks 1 to 6. Take the Midterm Exam. This is an open-book exam, but you are highly encouraged to review the materials ahead of time to ensure you can complete your exam in a timely manner. You are not allowed to ask for help from classmates or others as you take the exam. If you have any difficulty accessing the exam or experience any other technical issues, please contact your teacher. 6/12/24, 9:42 PM 7.3 Midterm Exam: ECON 161-01P Microeconomics https://ensign.instructure.com/courses/20024/quizzes/278839?module_item_id=2503677 1/19

Submitted Jun 4 at 5:15pm This attempt took 199 minutes.  Question 1 2 / 2 pts Your Answer:  Question 2 2 / 2 pts Your Answer: Provide a definition and an example of the following fundamental economic principle: Specialization Specialization is when a company or firm is focused on a specific production process, and an individual focuses on a specific skill or activity. Examples of specialization Microeconomic - This is the smallest level of specialization where an individual chooses a specific career path that suits their needs. If I am good at business, I will specialize in economics, or if I am good at maths, I will choose a related field. This individual or company-specific specialization creates highly skilled labor or high-quality products. Macroeconomic - this kind of specialization is driven by identifying demanded products, and certain countries/regions or firms take advantage of capitalizing on the demand by making that product of quality and cheaper than would-be competitors. Provide a definition and an example of the following fundamental economic principle: Comparative advantage 6/12/24, 9:42 PM 7.3 Midterm Exam: ECON 161-01P Microeconomics https://ensign.instructure.com/courses/20024/quizzes/278839?module_item_id=2503677 2/19

 Question 3 2 / 2 pts Your Answer:  Question 4 2 / 2 pts Your Answer: Comparative advantage - this is producing goods or services cheaper than those of your competitor. An example is when we compare Chinese labor costs to those of the United States. Chinese workers produce consumer goods at a lower price than those in the USA; hence, many imported goods are from China. Provide a definition and an example of the following fundamental economic principle: Supply and demand Supply and demand is the concept that prices are determined by the relationship between goods and services being supplied and goods and services being demanded. When a trend of particular products/services is in demand, the supplier will be able to sell them at a higher price because the demand will outweigh the supplies Provide a definition and an example of the following fundamental economic principle: Opportunity costs Opportunity costs - what you give up to buy what you want regarding other goods and services. For example, you spend time and money going to a movie, but you cannot spend that time at home reading a book, and you can't spend the money on something else. 6/12/24, 9:42 PM 7.3 Midterm Exam: ECON 161-01P Microeconomics https://ensign.instructure.com/courses/20024/quizzes/278839?module_item_id=2503677 3/19

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

 Question 5 2 / 2 pts Your Answer:   Question 6 2 / 2 pts Your Answer: Provide a definition and an example of the following fundamental economic principle: Scarcity Scarcity - when product/service is limited, and you have to satisfy your want with limited resources. some examples of scarcity are land, water - they are limited and cannot be produced in mass Based on the following Pearl Market scenario below answer questions 6, 7, & 8: You go on vacation for 14 days to an island in the middle of the ocean that is known for selling beautiful pearls. On day 1 of your vacation, you buy 10 small pearls for $10 from the 100 pearls available. The next day, there is a storm that destroys the boats in the area, including the pearl divers’ boats. The day you leave, you return to the pearl market and ask to buy 1 more pearl. Pearl Market Scenario: Estimate what the price of pearls would be on the last day of your vacation. Would the price rise, decrease, or stay the same? The single pearl would cost you a lot more to purchase from the pearl vendor than the ten pearls you bought on the first day. The merchant knows you are prepared to pay a premium for the last pearl. After all, the storm has made pearls scarce. 6/12/24, 9:42 PM 7.3 Midterm Exam: ECON 161-01P Microeconomics https://ensign.instructure.com/courses/20024/quizzes/278839?module_item_id=2503677 4/19

 Question 7 4 / 4 pts Your Answer: The quantity of pearls demanded is probably not very sensitive to price fluctuations, indicating that the elasticity of demand for pearls is likely inelastic. This is because pearls are a luxury good, and even if their price increases, people will still pay more. Pearl Market Scenario: Draw 1 diagram showing the supply and demand for pearls on the island before and after the storm. On the same diagram, show the shift of the supply or demand curve to the proper location. 6/12/24, 9:42 PM 7.3 Midterm Exam: ECON 161-01P Microeconomics https://ensign.instructure.com/courses/20024/quizzes/278839?module_item_id=2503677 5/19

 Question 8 4 / 4 pts Your Answer: Pearl Market Scenario: Use your diagram and principles of supply and demand to explain your estimated price for pearls on the last day of your vacation. In the below diagram, the demand and supply curve are in equilibrium. When the price charged is $10 for 10 units of pearls, DD is the initial downward-slopping demand curve showing the inverse relationship between demand and price; SS is the initial upward-slopping supply curve showing the direct positive relationship between supply and price. 6/12/24, 9:42 PM 7.3 Midterm Exam: ECON 161-01P Microeconomics https://ensign.instructure.com/courses/20024/quizzes/278839?module_item_id=2503677 6/19

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

 Based on the following Car Manufacturer Scenario, answer questions 9, 10, & 11 You are a minimum-wage worker at a U.S. company that makes cars. This morning, your government announced it would save the American people money on cars by capping the price of the kind of cars you make at $10,000. Some of your co-workers know you are taking this course, and want your opinion on what will happen. Last month’s finance report on your profits and sales is below. Monthly Financial Report Total Profit Total Monthly Revenue $2,400,000 Total Monthly Costs $2,000,000 Total Monthly Profit $400,000 Revenue Average Price of Cars # of Cars Sold Total Revenue $12,000 200 $2,400,000 6/12/24, 9:42 PM 7.3 Midterm Exam: ECON 161-01P Microeconomics https://ensign.instructure.com/courses/20024/quizzes/278839?module_item_id=2503677 7/19

 Question 9 2 / 2 pts Your Answer:  Question 10 4 / 4 pts Employee Salaries Hourly Rate Monthly Pay per Employee # of Employees Total Monthly Cost General Manager $30/hour $4,800 1 $4,800 Shift Managers $15/hour $2,400 5 $12,000 Assembly-Line Employees $12/hour $1,920 25 $48,000 Total Monthly Cost of Salaries $64,800 Car Manufacturer Scenario: What would your company’s monthly profits be if they did not make any changes except reducing the price of the car from $12,000 to $10,000? There will be no profit if the company sells a car for 10,000. But if the company does some marketing actions, there will be a doubled sale of the car per month resulting in profit twice as much as profit even if the price per car is 10,000 6/12/24, 9:42 PM 7.3 Midterm Exam: ECON 161-01P Microeconomics https://ensign.instructure.com/courses/20024/quizzes/278839?module_item_id=2503677 8/19

Your Answer:  Question 11 4 / 4 pts Your Answer:  Car Manufacturer Scenario: Identify at least one action your company should take. The company might develop marketing strategies, such as making the capped price a promo and using a modern promotion method. Do some promotions. In that way, customers will think that they will be able to save a lot and that it will be worth buying. Also, utilize the employees' time to help promote as well. Giving incentives to the employees when they can sell a car would help them boost their initiative, which would result in many more sales per month. Car Manufacturer Scenario: Be specific, and explain why you came to that conclusion using the principles of supply and demand. Now that people are more into saving, they would either think if buying a car is worth it or not. This will decrease car demand and prevent the money from falling into the company because cars are not sold. Making it look worth buying by making promotions. The decrease in price results in more customers buying the car because of the decrease in price. Once people think that the price decrease from the promotion won't last since it is just a promotion with an end period, more people will be encouraged to buy a car, which will increase the sales of the car. Because many people buy a car, some will become future buyers, thinking of it as a trend and coming from word of mouth, encouraging others to buy even if the promotion has ended. Thus, even the promotion or price decrease has ended, resulting in an increase in sales. Based on the following Buying a Home Scenario, answer questions 12, 13, &14: You are getting a loan to buy your first home. It is a $250,000 home with 3 bedrooms and 2 bathrooms. The price is so low because the economy was bad, a lot of people lost their jobs, and few people are buying homes. You got the following information from the bank: 6/12/24, 9:42 PM 7.3 Midterm Exam: ECON 161-01P Microeconomics https://ensign.instructure.com/courses/20024/quizzes/278839?module_item_id=2503677 9/19

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

 Question 12 3 / 3 pts Your Answer:  Question 13 3 / 4 pts Your Answer: Loan Amount: $150,000 Interest Rate 1 month ago: 4.5% Today: 4.1% Loan Period: 15 years (180 months) Buying a Home Scenario: Based on what you are hearing from friends and what you know about supply and demand in financial markets, What would you predict about the level of interest rates for house loans in the future? Will they stay the same, increase, or decrease? As the economy is currently experiencing bad economic conditions. The government and banks are responsible for reviving the country's economy. Since people lost their jobs, people cannot pay home loans with a high interest rate due to low income and unemployment. The interest rate would further decrease from 4.1%. Therefore, in other words, the quantity of money supplied by the government and banks for home loans to people will increase, resulting in lower Interest rates. Buying a Home Scenario: Explain your answer by drawing and explaining 2 supply and demand curves, one showing the interest rate today (assume it is 4.1%) and one predicting what the interest rate will look like in 1 month. Upload your document in the space below 6/12/24, 9:42 PM 7.3 Midterm Exam: ECON 161-01P Microeconomics https://ensign.instructure.com/courses/20024/quizzes/278839?module_item_id=2503677 10/19

As we can see in the illustration, as more money is lent, the supply curve shifts to the right, resulting in a decrease in the equilibrium interest rates. 6/12/24, 9:42 PM 7.3 Midterm Exam: ECON 161-01P Microeconomics https://ensign.instructure.com/courses/20024/quizzes/278839?module_item_id=2503677 11/19

 Question 14 2 / 2 pts Your Answer: It is the same concept: when supply increases, accompanied by no change in demand, the curve shifts towards the right. When supply increases, excess supply arises at the old equilibrium level. This induces competition among the sellers to sell their supply, decreasing the price. This decrease in price, in turn, leads to a fall in supply and a rise in demand. These processes operate until a new equilibrium level is attained. Lastly, such conditions are marked by a decrease in price and an increase in quantity. Buying a Home Scenario: Based on what you know in this situation, does it matter when you make the decision to purchase a house? Explain. 6/12/24, 9:42 PM 7.3 Midterm Exam: ECON 161-01P Microeconomics https://ensign.instructure.com/courses/20024/quizzes/278839?module_item_id=2503677 12/19

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

  Question 15 2 / 2 pts Your Answer:  Question 16 4 / 4 pts Yes, it matters when you decide to purchase a house. To minimize and limit the risk of default. There's a good chance that we'll pay tens of thousands of dollars in interest alone over the life of your mortgage. That's why finding a loan with a low-interest rate is so important. This can save us thousands of dollars in the long term. The more lenders we check, the more likely we'll get a good rate. To conclude, before purchasing a dream home, we need to be sure that our finances are in order and that we've prepared wisely to avoid the risk of default when paying home loans. Based on the following Laptop scenario, answer questions 15, 16, & 17: You just won a new laptop in a contest, and you have decided to sell your old one. It is a Mac that you bought brand new last year for $1,399.00. You do not have a lot of money and want to get the highest price possible for your old laptop. You are listing the laptop online, and you need to identify the price it will sell it for. Laptop Scenario: What price would you list your laptop for? I have listed the possible maximum price for my old laptop. As it is just 1 Year old, the new price will differ from the old one. I want to search the second-hand market for MAC and try to get an idea. The maximum price the bidder got is I am selling the 1-year-old MAC. Would me my listing price for my product Laptop Scenario: 6/12/24, 9:42 PM 7.3 Midterm Exam: ECON 161-01P Microeconomics https://ensign.instructure.com/courses/20024/quizzes/278839?module_item_id=2503677 13/19

Your Answer:  Question 17 3 / 3 pts Your Answer: Explain why the price you proposed would maximize your revenue using the principles of supply and demand. DD- The demand curve depicts all the possible price-quantity combinations of the consumers. SS- The supply curve depicts all the possible price-quantity combinations of the seller equilibrium price, Quantity in the market When we quote price ( ), revenue will be maximum following the principles of supply and demand. Laptop Scenario: Do you believe the demand for your laptop will be elastic or inelastic? Explain. 6/12/24, 9:42 PM 7.3 Midterm Exam: ECON 161-01P Microeconomics https://ensign.instructure.com/courses/20024/quizzes/278839?module_item_id=2503677 14/19

  Question 18 2 / 3 pts Your Answer: Laptop goods are not necessarily necessary goods; demand is elastic. More will be the change in quantity. Therefore, the required answers are given in the above steps. Based on the following Barriers to Trade scenario, answer questions 18, 19, 20, & 21 You own Steelco, a U.S.-based company that produces steel. You and other U.S.-based steel producers have been losing customers to Chinese producers, who charge a lower price for their steel. One of the other steel companies convinced the U.S. government to impose a tariff on Chinese steel, and you want to identify how the tariff will impact how much steel you should produce. Information: Chinese Steel Current price of Chinese steel per metric ton = $600 Tariff = $500 added per metric ton of Chinese steel imported into the U.S. Price of Chinese steel per metric ton after the tariff = $1,100 The current quantity of Chinese steel imported from China to the U.S. each year = 2 million metric tons All other U.S. steel producer Without the tariff and with China producing 2 million metric tons of steel at $600 all other steel manufacturers would produce = 1 million metric tons of steel. Without China in the market, it is estimated that all other U.S. steel manufacturers will produce 2.5 million metric tons of steel at an equilibrium price of $900/metric ton of steel. Barriers to Trade Scenario: Draw a supply and demand curve for U.S. produced steel before and after the tariff. 6/12/24, 9:42 PM 7.3 Midterm Exam: ECON 161-01P Microeconomics https://ensign.instructure.com/courses/20024/quizzes/278839?module_item_id=2503677 15/19

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

A tariff will cause the supply curve to shift to the left.  Question 19 1 / 1 pts The graph shows the domestic equilibrium price (where the demand curve cuts the supply curve) is $500. But the world price is $300. Consumer surplus is below the demand curve (up to the quantity demanded) but above the price consumers pay. Here, consumer surplus is below the demand curve (up to quantity 70) but above price $300. Producer surplus is above the supply curve (up to the quantity supplied) but below the price producers pay. Here producer surplus is area above the supply curve (upto quantity 30 million) but below price $300. Barriers to Trade: 6/12/24, 9:42 PM 7.3 Midterm Exam: ECON 161-01P Microeconomics https://ensign.instructure.com/courses/20024/quizzes/278839?module_item_id=2503677 16/19

Your Answer:  Question 20 1 / 1 pts Your Answer: What is the estimated equilibrium price of U.S. steel, without imported Chinese steel? The quantity demanded exceeds the quantity supplied at a world price of $300. So, at this price, the US will import. Quantity demanded = 70 million tonnes. Quantity supplied = 30 million tonnes. The quantity imported = 40 million tonnes. In the graph: Consumer surplus is below the demand curve (up to the quantity demanded) but above the price consumers pay. Here, consumer surplus is below the demand curve (up to quantity 70) but above price $300. Producer surplus is above the supply curve (up to the quantity supplied) but below the price producers pay. Here producer surplus is area above the supply curve (upto quantity 30 million) but below price $300. Barriers to Trade: What is the estimated quantity of U.S. produced steel without imported Chinese steel? Without China in the market, it is estimated that all other U.S. steel manufacturers will produce 2.5 million metric tons of steel. 6/12/24, 9:42 PM 7.3 Midterm Exam: ECON 161-01P Microeconomics https://ensign.instructure.com/courses/20024/quizzes/278839?module_item_id=2503677 17/19

 Question 21 1 / 1 pts Your Answer:  Question 22 3 / 3 pts Your Answer:  Barriers to Trade Scenario: Identify and explain who will make and lose money from this tariff. After the tariff on China, the Chinese price will increase to $1,100, and the domestic price will remain at $600. China will lose, and the US will gain due to lower prices charged. Barriers to Trade Scenario: Answer the following questions: Identify the people and organizations that will benefit from the tariff. Identify the people and organizations that will suffer because of the tariff. How the tariff will impact your company. The government will receive tariff revenue. Domestic firms will have a larger share and will charge $900 (higher than $600, which was charged when China was part of the market) China will lose as its prices have increased. Consumers will also lose as the prices have increased from 600 to 900. My company (US- based) will gain due to less competition and more revenue. 6/12/24, 9:42 PM 7.3 Midterm Exam: ECON 161-01P Microeconomics https://ensign.instructure.com/courses/20024/quizzes/278839?module_item_id=2503677 18/19

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

Question 23 3 / 3 pts Your Answer: Quiz Score: 58 out of 60 Choose your favorite economic topic from the first half of the semester. Explain what you have learned and how this topic will help you in the future. Wage impact When an individual is armed with the right tools and skills, as the wage market increases, more and more people are willing to work due to higher wages. The relationship between the market wage and the number of workers who want to work for that amount is called labor supply. To be part of this upward-sloping curve, one must be skilled and have the right education and experience. 6/12/24, 9:42 PM 7.3 Midterm Exam: ECON 161-01P Microeconomics https://ensign.instructure.com/courses/20024/quizzes/278839?module_item_id=2503677 19/19

7.3 Midterm Exam_ ECON 161-01P Microeconomics

Related Documents