wL' Gt , A1, Qlo, dr_r-, QtK, L?>+,_,AJ , Olo,Qzt , 024.], "r-7 {? /}fD t1l ga"* ^ '7 )r-- '--a. The economy is operating at firll-employm.ent producing a lot of capital goodslegal price ceiling is imposed on capital goods. P V As 'f k iz)a)*tt"n ut'{p*' the econorril i:"Kr ;iT"'goods than before'""eta f,l" Pl | => A"rkon ydctits. The tax was legallyffi-fosed on the bu5rers of _ttrgrgluxury goods. Within ayear, a number of New Englandyacht building firnfe failed and their unemployed workers protested vrgorously.teclrirologicalfb:Ne. Caretully explain the connection between your diagrams.l* < but.huil"n'Exam 1 Sample Q.r"rtiosrff*n rE'o06UY 1. Suppose that the economy produces two types of goods: consumer goods (C) and capitalgoods (IQ. Use production possibilities curve (PPC) diagrams and brief verbal explanationsto explain the following situations: I|.r+w Ct'^'U'u^tnSUB)|Pctb. The economy is operating at full-employrnent both before and after a major technologicalK-,use compeutlveC-ldiagrams of the camera market and the filnt(surpiuses) when many dealers refused to cut their sticker prices." Use a supply/demarrddiagram of the 'fuel inefhcient' or 'gas guzzling' car market and brief verbal descriptionsKFF")t?Br4-tInterestingly, yacht buyers voiced little concem about the tax. Use a supplyidemanddiag:arn of the yacht market and your knowledgeof a per-rurit excise tax to explain this episode.!vo1'4'6. Suppose there is a technological advance in thsupply/demand diagram of the hydrogen bomb market and a production possibilitiesourve (PPC) diagram showing 'miiitary' and 'civilian' goods to illustrate thisN U.A) Vb"ra-ru'sJ.-D atx*"etitive market supply/dee entire economic incidence of a per-unit exciseUFuo - buyers even though the tax is legally imposed exclusivel Ep =0.C ue ? Price elastici^ -!--.tfut'L.ry} a;) . to*>tilo^/^!,,f,u^(L\1. Ib "f* +""7. Recently, the Clinton administration proposed a $1Q0 per-unit (pu"D excise tax'on-:- / a. a r r r 7 ,1 ,-=-7' z-:-ii---scigarettes (which would be imposed teggtly or stamffion'cigar-tt" @. Snews reports have suggested that the !-roposed tax would increase cigfrffi prices by.$J,QO-n"t pack and be paid entirely by smokers (cigarette buyers). Using a competitive^-.---\l--ll^-^-l ):^-^-- ^C Ll-^ -l-^--^u^ ,-^-,-1--L -- -n-11-- -1 - - I 7 . ilsupp'ly/demand diagram of the cigarette marke! carefuIIy show and explain thecircumstances under which these new reports would be true. En =e Dt ""--ll- d ) M)a)d )rilt-vX^w,circumstances under which these new reports would be true. EA=e8. Why are there so many different nominal interest rates? Explain carefully. qes consumer goods and capital goods. Suppose ttfu*r,:':;".::ff :"t"0?tl,flu?,,'"lo'",1J",iit3compare this economy's production combinationFP VrCz'Xazc'ee.i D .t^t-f--..."plc, 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 fewconsumer goods to satisfy their collective wants." IJse a production possibiiities curvediagram and brief verbal descriptions to explain the Soviets' economic growthlFoUse another PPC diagram and brief verbal description to explain the small number ofSoviet consumer goods. --r^\ '--i\'- - '<-\F*:4*oJ)' -lr r"l,,?\ ^. | '(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\rD--\ 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 . p ithe State legislature passes a $10.00 per credit hour tuitiop subsidy legallD r,.*f.*nayable to OU students. Use a supply/demand djof the OU educational bervimarket to explain the conditions under which trvould flow to the U.niyersity (not the students).'F-"-'"-----"mic benefit of the subsidir@ Suppose that movies and popo",-nPnL$firk=go goods. Further supposescreenwriters' wages (a major cost of producing movies) increase sharply due to aunion contract. Using separate competitive supply/demand diagrams of the moviepopcorn markets, illustrate and briefly explain the probable effects of the screenwriters' Pwage increase on: Equilibrium prices, equilibrium quantities, and S&LpVgrUgS in the Imovre and popcom markets. h If Khg t PiW rzt-e'tvzi'r'llthat parnewondQilIf'te>- I**I*@-v'*'l"h +"* c""!'''il'l, ^ Ilus, f;c!- b?. *r7- '!""--('^ (v*'L'y"-'t) pt Q'l/^pos, p--'w "{*^ ilrrrl4 'fffi'lPos , fr^-'c4- a+e^ Sr[s>rl"t *'oZr#,.o.*i'rur 'l,tt 'yL *,1 l'7'.* 1"?:l S\9"hsil7 : n7+n;w- tovE$=o )n"Ia*'t- - LT" - VwqviQ,,'ct- y* "'"'l ""'y^ ilto-t flTn"Aa;J-,1 t ' JISo^u. aa f14. kL 1992, Congress passed a per-unit excise tax on yachts. Although legally the taxwas to be collected from yacht suppliers, the law was intended to make the rich yachtbuyers pay more of the tax burden. The tar was repealed in 1993 in response to thevigorous protests of yacht manufacturers and their workers. Use a competitivesupplyidemand diagram of the yacht market and yow knowledge of economic taxincidence 9v//,taf) cotrt States economy wasrcYaracteri The Soviet economy at thattime, however,was operating at full-employment. By the end of the year, the U.S. economy had movedto full-employment, increasing its output of both civilian and military goods. The Sovieteconomy was still at full-employment at year's end, but producing many fewer civilian_,6ibilities curve (PPC) diagrams of the U.S. and Soviet economies to illustrate andexplain these historical events.qr,f,= |.FPC- .16. Suppose there are two types of OU football tickets: (1r,- nftc,r 16. Suppose there are two types of OU football tickets: (1) good tickets and (2) bad(t \ tickeis. F-urther suppose that the bad ticket market is in equilibrium at $35/ticket, tis in equilibrium at $35/ticket, but theffi ti"t "t rnarkef is not in equilibrium at that price. Draw separate oompetitivesupt'ly/demand diagrams of tl e good and bad ticket markets to explain this situation.ifically, 'uvhat disequilibrium situation do you expect in the good ticket market?{*.Sf - -- /a. rloyment producing a lot of consumer goodswl ?r9"."t*)Mr+Mraxv'4j*-r-jr -iU ) Recently, Congressional Republicans wanted t/\ g6oline (which is statutorily or legally imposed-,---^--:-- L7^^ L^-- ---^--1 I l----- - ----l: - :1