ASSIGNMENT
Question 1
a.
Write a brief definition of economics. Elaborate the conditions that give rise to this
definition.
[3 marks]
Analyse the THREE interrelated features of the economic perspective?
[6 marks]
c.
Some stores give “free” products to consumer. An economist would say the products
are not free. Is there any difference? Explain.
[5 marks]
[TOTAL: 14 MARKS]
Question 2
a.
Use marginal analysis to explain why it is possible to “have too much of a good thing.”
Use education as an example.
[4 marks]
Explain the importance of the ceteris paribus or “other-things-being-equal” assumption.
[4 marks]
Comment on the statement from an opportunity cost perspective: “The major cost of
going to college is the $15,000 per year in tuition.” Assume that a person could have
earned $30,000 a year if the person did not go to college.
[6 marks]
[TOTAL: 14 MARKS]
Question 3
a.
Why might it be a good economic decision for a person such as Bill Gates or Steve Jobs
to drop out of college? Give an economic justification for such a decision.
[3 marks]
How are tradeoffs illustrated by the production possibilities curve? Consider the case of
Federal government spending on national defense and spending on social programs.
[3 marks]
[TOTAL: 6 MARKS]
Question 4
Rafidah was earning $100,000 a year working as a scientist for a drug company. She decided
to start her own business that conducted drug trials. She estimates this entrepreneurial talent or
1
b.
b.
c.
b.
a.
Write a brief definition of economics. Elaborate the conditions that give rise to this
definition.
[3 marks]
Analyse the THREE interrelated features of the economic perspective?
[6 marks]
c.
Some stores give “free” products to consumer. An economist would say the products
are not free. Is there any difference? Explain.
[5 marks]
[TOTAL: 14 MARKS]
Question 2
a.
Use marginal analysis to explain why it is possible to “have too much of a good thing.”
Use education as an example.
[4 marks]
Explain the importance of the ceteris paribus or “other-things-being-equal” assumption.
[4 marks]
Comment on the statement from an opportunity cost perspective: “The major cost of
going to college is the $15,000 per year in tuition.” Assume that a person could have
earned $30,000 a year if the person did not go to college.
[6 marks]
[TOTAL: 14 MARKS]
Question 3
a.
Why might it be a good economic decision for a person such as Bill Gates or Steve Jobs
to drop out of college? Give an economic justification for such a decision.
[3 marks]
How are tradeoffs illustrated by the production possibilities curve? Consider the case of
Federal government spending on national defense and spending on social programs.
[3 marks]
[TOTAL: 6 MARKS]
Question 4
Rafidah was earning $100,000 a year working as a scientist for a drug company. She decided
to start her own business that conducted drug trials. She estimates this entrepreneurial talent or
1
b.
b.
c.
b.
ASSIGNMENT – BMME5103
forgone entrepreneurial income to be $10,000 a year. She used $500,000 in savings that
earned 5 percent interest annually to finance the new business. In the first year, the firm earned
revenue of $1,500,000. The costs for rent, supplies, and employees’ salaries were $1,100,000.
What was the accounting profit for the new business? What was the economic profit (or loss)?
Explain your calculations for both questions.
[TOTAL: 6 MARKS]
Question 5
Suppose Tom, Dick, and Harry live in a barter economy. Tom produces wine, Dick bakes
bread, and Harry makes cheese. Tom wants some bread to go with his wine and is willing to
trade 1 gallon of wine for two loaves of bread. Dick wants some cheese to go with his bread
and is willing to trade one loaf of bread for one-half pound of cheese. Harry doesn’t want bread,
but wants some wine to go with his cheese and is willing to trade cheese for one gallon of wine.
It is not possible for all three of them to meet together at one time.
a.
Explain how this situation illustrates the difficulty with a barter economy.
[4 marks]
b.
Devise a money system using precious stones where four stones are equivalent in value
to one gallon of wine. In other words tell how much bread and cheese would be worth in
terms of stones in this economy. In this system, how much cheese must Harry sell in
order to buy one gallon of wine?
[8 marks]
[TOTAL: 12 MARKS]
Question 6
What effect should each of the following have upon the demand for portable music players in a
competitive market? Explain your reasoning in each case.
a.
b.
c.
d.
the development of improved, low-priced devices that compete with music players
[3 marks]
an increase in population and incomes
[3 marks]
a substantial increase in the number and quality of music for players
[4 marks]
consumer expectations of substantial price increases in music players
[4 marks]
[TOTAL: 14 MARKS]
2
forgone entrepreneurial income to be $10,000 a year. She used $500,000 in savings that
earned 5 percent interest annually to finance the new business. In the first year, the firm earned
revenue of $1,500,000. The costs for rent, supplies, and employees’ salaries were $1,100,000.
What was the accounting profit for the new business? What was the economic profit (or loss)?
Explain your calculations for both questions.
[TOTAL: 6 MARKS]
Question 5
Suppose Tom, Dick, and Harry live in a barter economy. Tom produces wine, Dick bakes
bread, and Harry makes cheese. Tom wants some bread to go with his wine and is willing to
trade 1 gallon of wine for two loaves of bread. Dick wants some cheese to go with his bread
and is willing to trade one loaf of bread for one-half pound of cheese. Harry doesn’t want bread,
but wants some wine to go with his cheese and is willing to trade cheese for one gallon of wine.
It is not possible for all three of them to meet together at one time.
a.
Explain how this situation illustrates the difficulty with a barter economy.
[4 marks]
b.
Devise a money system using precious stones where four stones are equivalent in value
to one gallon of wine. In other words tell how much bread and cheese would be worth in
terms of stones in this economy. In this system, how much cheese must Harry sell in
order to buy one gallon of wine?
[8 marks]
[TOTAL: 12 MARKS]
Question 6
What effect should each of the following have upon the demand for portable music players in a
competitive market? Explain your reasoning in each case.
a.
b.
c.
d.
the development of improved, low-priced devices that compete with music players
[3 marks]
an increase in population and incomes
[3 marks]
a substantial increase in the number and quality of music for players
[4 marks]
consumer expectations of substantial price increases in music players
[4 marks]
[TOTAL: 14 MARKS]
2
ASSIGNMENT – BMME5103
Question 7
a.
Newspaper item: “Due to lower grain prices, consumers can expect retail prices of
choice beef to begin dropping slightly this spring with pork becoming cheaper after
midsummer,” the Agriculture Department predicted. “This reflects increasing supply,”
the department said. Does the statement use the term “supply” correctly? What effects
might this announcement have on consumer demand? Explain.
[9 marks]
Suppose the Malaysian Government is considering passing an excise tax that would
increase the price of a pack of cigarettes by $1.00. What would be the likely effect of
this change on the demand and supply of cigarettes? What is likely to happen to
cigarette prices and the quantity consumed if the tax bill is enacted? CLICK HERE TO ORDER THIS ESSAY!!!!
[5 marks]
What is the difference between a change in supply and a change in quantity supplied?
[5 marks]
[TOTAL: 19 MARKS]
Question 8
a.
The president of a toy company asks you for advice about whether the company should
cut the price of its best-selling doll this year based on the following information: last year
the company cut the price of its best-selling doll by 10% and the total revenues from doll
sales increased by 10%.
[3 marks]
The owner of a health club asks you for advice about whether the company should raise
or lower the price of its membership this year based on the following information: last
year the club raised the price of its membership by 5% and the number of members
paying the same fee fell by 7%.
[3 marks]
The owner of a restaurant is considering lowering menu prices to draw in more
customers. He is debating between lowering the price for the steak entrée or the salmon
entrée. When he lowered prices last year, a $2.00 decrease in price for the $15 steak
resulted in a growth in steak sales from 75 per week to 100 per week. A $2.50 decrease
in the price of the $17 salmon entrée increased sales from 40 to 75 meals per week.
Which entrée should he choose to put on sale?
[5 marks]
b.
c.
b.
c.
3
Question 7
a.
Newspaper item: “Due to lower grain prices, consumers can expect retail prices of
choice beef to begin dropping slightly this spring with pork becoming cheaper after
midsummer,” the Agriculture Department predicted. “This reflects increasing supply,”
the department said. Does the statement use the term “supply” correctly? What effects
might this announcement have on consumer demand? Explain.
[9 marks]
Suppose the Malaysian Government is considering passing an excise tax that would
increase the price of a pack of cigarettes by $1.00. What would be the likely effect of
this change on the demand and supply of cigarettes? What is likely to happen to
cigarette prices and the quantity consumed if the tax bill is enacted? CLICK HERE TO ORDER THIS ESSAY!!!!
[5 marks]
What is the difference between a change in supply and a change in quantity supplied?
[5 marks]
[TOTAL: 19 MARKS]
Question 8
a.
The president of a toy company asks you for advice about whether the company should
cut the price of its best-selling doll this year based on the following information: last year
the company cut the price of its best-selling doll by 10% and the total revenues from doll
sales increased by 10%.
[3 marks]
The owner of a health club asks you for advice about whether the company should raise
or lower the price of its membership this year based on the following information: last
year the club raised the price of its membership by 5% and the number of members
paying the same fee fell by 7%.
[3 marks]
The owner of a restaurant is considering lowering menu prices to draw in more
customers. He is debating between lowering the price for the steak entrée or the salmon
entrée. When he lowered prices last year, a $2.00 decrease in price for the $15 steak
resulted in a growth in steak sales from 75 per week to 100 per week. A $2.50 decrease
in the price of the $17 salmon entrée increased sales from 40 to 75 meals per week.
Which entrée should he choose to put on sale?
[5 marks]
b.
c.
b.
c.
3
ASSIGNMENT – BMME5103
d.
A gasoline station very near a professional football stadium parks cars on its lot to make
money on game days. Last year it charged $4.00 per car and parked 1000 cars. This
year it raised the parking price to $5.00 and parked 850 cars. Did the station owner
make a good economic decision in raising the parking prices from one year to the next?
Explain.
[4 marks]
[TOTAL: 15 MARKS]
4
d.
A gasoline station very near a professional football stadium parks cars on its lot to make
money on game days. Last year it charged $4.00 per car and parked 1000 cars. This
year it raised the parking price to $5.00 and parked 850 cars. Did the station owner
make a good economic decision in raising the parking prices from one year to the next?
Explain.
[4 marks]
[TOTAL: 15 MARKS]
4
