E-con exam

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It is online exam. The exam will be similar in attachments. I have 2 hours nd half for do it.

GM 545 Practice Final

 

  1. (TCO A)  As a manager of a factory, what would you regarding pricing and production if:


a. If there is an increase in supply?


 

 

 

        b. if there is a decrease in supply and a decrease in demand?

 

 

 

 

        c. The price of a substitute good rises and your labor costs rise?

 

 

 

2. (TCO B)  The following table shows part of the demand for tickets to a local sporting event:
                Price(P)...Quantity(Q)
                          15...........40
                          10..........100
                           6............150
                           3............250

    a. Is demand elastic in the $3 - $6 price range?

 

 

 

 

 
      b.  Ed = 0.8 in the $6 - $10 price range. In this range of demand, by what percentage would quantity demanded change if price changes by 5 percent? 

 

 

 


    c.Price falls from $15 to $10. Does total revenue (TR) increase, decrease, or remain the same?

 

 

 

 

 

3. (TCO C)  You have been hired to manage a small manufacturing facility which has cost and production data given in the table below.  

                        Total                            Total
Workers     Labor Cost      Output     Revenue
     1                $200               60          $300
     2                  400             160           700
     3                  600             240          1200
     4                 800              280          1600
     5                1000             300          1750

 (a.) What is the marginal product of the second worker? 

 

(b.) What is the marginal revenue product of the fourth worker?  

(c.) What is the marginal cost of the first worker?  

 



(d.) Based on your knowledge of marginal analysis, how many workers should you hire? Explain you answer.  

 

 

 

4. (TCO C)  Answer the next question on the basis of the following cost data for a purely competitive seller:
    Total Product       TFC            TVC
              0               $50              $0
              1                 50              80
              2                 50            130
              3                 50            160
              4                 50            200
              5                 50            270
              6                 50            360
Refer to the above data.  If the product price is $80, at its optimal output will the firm realize an economic profit, break even, or incur an economic loss?  How much will the profit or loss be?  Show all calculations.

 

 

 

 

 

 

 

 

 

5. (TCO D)   A handbag  producer has fixed costs of $20,000 per month and her Total Variable Costs (TVC) as a function of output Q are given below:

                         TVC                           Price
  5,000               $ 6,000                          $9  
15,000                16,000                            7   
25,000                30,000                             5
35,000                46,000                            3   
45,000                66,000                            1    

 

(a)  If it can only be produced in the quantities above, what should be the production level if the producer operates in a monopolistic competitive market where the price of software at each possible quantity is also listed above? Why? (Show all work).

 

 

 

 

 

 



(b.) What should be the production level if fixed costs rose to $30,000 per month? Explain

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6. (TCO F) Suppose nominal GDP in 2005 was $10 trillion and in 2006 it was $14 trillion.  The general price index in 2005 was 100 and in 2006 it was 110.  Between 2005 and 2006 real GDP rose by what percent?

 

 

 

 

 

 

 

 

 

 

 

 

 

  1. In a given year in the United States, the total number of residents is 300 million, the number of residents under the age of 16 is 50 million, the number of institutionalized adults is 20 million, the number of adults who are not looking for work is 30 million, and the number of unemployed is 12 million.

  2. (b1.)   Refer to the data in the above Scenario.  What is the size of the labor force in the United States for the given year?   

 

 

 

 

 

 

 


(b2.)   Refer to the data in the above Scenario.  What is the unemployment rate in the United States for the given year?   

 

 

 

 

 

8. (TCO G)       

(a.) First National Bank is fully loaned up with reserves of $40,000 and demand deposits equal to $200,000. The reserve ratio is 20%. Households deposit $10,000 in currency into the bank. How  what is the maximum amount of new money that can be created in the banking system as a result of this deposit?  Show all work.  

           

 

 

 

 


(b.) What is the fed funds rate in the banking system, and explain how the Fed manipulates this rate in order to achieve macroeconomic objectives.  

 

 

 

 

 

 

 

 

 

 

 

9. Explain the difference between the Keynesian and Monetarist (Classical)  economic schools of thought regarding Government regulation of the economy.

 

 

 

 

 

 

 

 

 

 

10. Explain the Spending Multiplier effect.   If the savings rate is 20%, what is the spending multiplier?   How much would in increase in Government spending of $10 billion change  GDP?

 

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