wL Gt A1 Qlo QtK L AJ Olo Qzt t1l ga 7 dr r fD huil n r 7 r 024 Exam 1 Sample Q r rtiosrff n rE o06U Y 1 Suppose that the economy produces two types of goods consumer goods C and capital IQ Use production possibilities curve PPC diagrams and brief verbal explanations goods to explain the following situations I a a The economy is operating at firll employm ent producing a lot of capital goods legal price ceiling is imposed on capital goods P V As k iz B r w u t Ct U n SU tt n ut f Pct b The economy is operating at full employrnent both before and after a major technological p the econorril K use compeutlve than before i Kr iT goods C l diagrams of the camera market and the filnt KFF UFuo C etitive market supply de e entire economic incidence of a per unit excise buyers even though the tax is legally imposed exclusivel ue a tfut L ry Ep 0 Price elastici to tilo surpiuses when many dealers refused to cut their sticker prices Use a supply demarrd diagram of the fuel inefhcient or gas guzzling car market and brief verbal descriptions eta f l Pl A rk on ydctits The tax was legally ffi fosed on the bu5rers of ttrgrgluxury goods Within ayear a number of New England yacht building firnfe failed and their unemployed workers protested vrgorously Interestingly yacht buyers voiced little concem about the tax Use a supplyidemand diag arn of the yacht market and your knowledge of a per rurit excise tax to explain this episode vo1 4 6 Suppose there is a technological advance in th supply demand diagram of the hydrogen bomb market and a production possibilities ourve PPC diagram showing miiitary and civilian goods to illustrate this teclrirologicalfb Ne Caretully explain the connection between your diagrams l but N D b f u L 1 I U A V a ru sJ b r atx f t Br 4 t Cz Xazc ee i D t t7 Recently the Clinton administration proposed a 1Q0 per unit pu D excise tax on a a r r r 7 1 7 z ii s cigarettes which would be imposed teggtly or stamffion cigar tt S news reports have suggested that the roposed tax would increase cigfrffi prices by J QO n t pack and be paid entirely by smokers cigarette buyers Using a competitive Ll 1 L I 7 il C 1 l ll l n 11 l u supp ly demand diagram the cigarette of marke carefuIIy show and explain the circumstances under which these new reports would be true EA e En e Dt ll d rilt vX w M a 8 Why are there so many different nominal interest rates Explain carefully es consumer goods and capital r ff q goods Suppose ttfu t 0 tl flu lo 1J iit3 compare this economy s production combination FP Vr f plc Fo Uffi roduction mix heavily weigltgd torvard capital goods As a consequ n ih Soviets enjoyed some years f signifitsdt er onomic growth Coupled with price controls on consumer goods however the Plans also meant that Soviet citizens had very few consumer goods to satisfy their collective wants IJse a production possibiiities curve diagram and brief verbal descriptions to explain the Soviets economic growthl Use another PPC diagram and brief verbal description to explain the small number of Soviet consumer F 4 oJ lr r l i goods rD r J S rppose the out of pocket price for driving on a freeway is zero Now use a coinpetitive supply demand diagram of the freeway space market to explain traffic jams at 8 00 am but no jams at 11 00 pm Also use your diagram to explain the toll that would eliminate the morning trafric jams rffikf t y pi the State legislature passes a 10 00 per credit hour tuitiop subsidy legall of the OU educational bervi mic benefit of the subsidir D r f nayable to OU students Use a supply demand dj market to explain the conditions under which t rvould flow to the U niyersity not the students F Suppose that movies and popo nPnL firk go screenwriters wages a major cost producing goods Further suppose that par of movies increase sharply due to a new union contract Using separate competitive supply demand diagrams of the movie ondQil popcorn markets illustrate and briefly explain the probable effects of the screenwriters P wage increase on Equilibrium prices equilibrium quantities and S LpVgrUgS in the I movre and popcom markets h I t PiW rzt e tvzi r fIf te Khg ll I I v l h c il l 9 hsil7 I n7 n wE o n Ia tVwqviQ LT pt Q l v L y t b r7 f c lus pos ilrrrl4 Pos p w fr c4 a e Sr s rl t oZr o fffi l i rur l tt y 1 ct yL lt l 7 y n Aa J 1 I tov 1 l flT ilto t S J So u aa f 14 kL 1992 Congress passed a per unit excise tax on yachts Although legally the tax was to be collected from yacht suppliers the law was intended to make the rich yacht buyers pay more of the tax burden The tar was repealed in 1993 in response to the vigorous protests of yacht manufacturers and their workers Use a competitive supplyidemand diagram of the yacht market and yow knowledge of economic tax incidence 9v ta f cotrt rcYaracteri States economy was The Soviet economy at thattime however was operating at full employment By the end of the year the U S economy had moved to full employment increasing its output of both civilian and military goods The Soviet economy was still at full employment at year s end but producing many fewer civilian 6 of the U S and Soviet economies to illustrate ibilities curve PPC diagrams explain these historical events FPC and qr f 1 good tickets and 2 bad r nftc r 16 Suppose there are two types of OU football tickets 1 t tickeis F urther suppose that the bad ticket market is in equilibrium at 35 ticket but t the ti t rnarkef in is not equilibrium at that price Draw separate oompetitive ffi t diagrams of tl e good and bad ticket markets to explain this situation supt ly demand ifically uvhat disequilibrium situation do you expect in the good ticket market Mr Mr 9 t axv 4 j r jr iU Recently Congressional Republicans wanted t g6oline which is statutorily or legally imposed L7 L I l 1 1 l removing the tax would prices paro lower gasoline oy ouyers Dy rne nrrr 4 J cenrs 1 De Using competitive supply demand diagrams of the gasoline market and brief verbal r 1 lon c descriptions car two d l tvould be true Ea o g lrth Bld 18 r P I nf ypes of goods consumer goods c and capital D S nn le tvx eS ta rn …