Module 1: Written Homework Assignment Instructions

60 Points

Chase Joseph
Overview
Complete the following Module 1 Written Homework Assignment by the stated due date on the Schedule.
Please submit in the Module 1 Written Homework Assignment Dropbox as a .doc, .docx, .pdf or .rtf file.

Instructions
Complete the following questions in the form of short essays. Each question is worth 6 points. Be
sure to cite your references when needed. Type all responses following each question on this
assignment page and submit to the Dropbox.

1. Answer the following questions about opportunity costs:

a. Define opportunity costs.

Opportunity costs is choosing one choice in sacrifice of another. When I choose to hang out
with friends my opportunity cost is not being able to do school work. A better economic
example would be if I chose to save cash in a jar at home or open a savings account. My
opportunity cost would be having the cash readily available and the cost would be not
gaining interest on the savings.

b. If you receive a free ticket to a concert for your favorite music artist, what is your
opportunity cost of attending the concert?

The opportunity cost would be whatever else you’d be doing. So, if I’d be hanging out with
someone else, or doing homework, or going to another event, etc. that’s my opportunity cost for
attending.

c. Suppose you own a printing/graphics business that provides professional printing

and marketing services and web design to your customers. What might be an
example of an opportunity cost that your business might experience?

An example would be helping another client rather than a rival. If the company makes
an agreement to only do business with that client instead of the competition the cost
would be not having their business. Another example is if the business is working on one
project and can’t do another at the same time or quick enough they lose more business.

2. Answer the following questions about a production possibilities curve:

a. Why does the production possibilities curve have a shape which bows outward?

It’s showing the increase in opportunity cost.

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b. Given the following example of a production possibilities curve for the two goods,
why would you not choose point A?
c. Given the following example of a production possibilities curve for the two goods,
why would you not choose point X?

3. Define both terms and explain the difference between microeconomics and
macroeconomics. Is gross domestic product a microeconomic or macroeconomic question?
Is the price change of pizza a microeconomic or macroeconomic question?

4. The following is a table showing demand and supply in the snow ski market. Draw a graph
of supply and demand for yourself and then answer the following 3 questions.

Price Quantity Quantity

Demanded Supplied
$380 280 820
$340 340 700
$300 400 580
$260 460 460
$220 520 340
$180 580 220
$140 640 100

a. What is the equilibrium price and quantity for skis?

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b. If a price floor is set at $340, does the market experience a shortage or surplus? Why?
How much is the shortage or surplus?

c. If a price ceiling is set at $180, does the market experience a shortage or surplus? Why?
How much is the shortage or surplus?

5. Paint and paintbrushes are complement goods. Describe what occurs in both markets when
there is an increase in the price of paint. In your explanation, be sure and describe which
one is a change in quantity demanded with movement along the demand curve and which
one is a change in demand with a shift in the entire demand curve:
a. Explain what happens to the demand curve for paint when the price of paint
increases.
b. Explain what happens to the demand curve for paintbrushes when the price of paint
increases.

6. Briefly explain the three tax systems – proportional, progressive and regressive. As you
explain each one, also compare the relationship between marginal tax rate and average tax
rate as income rises for each one.

7. The next 2 parts to this question give changes that have occurred in the broiler chicken market.
For each change in a determinant given, draw in the change that would occur on the
supply/demand graph for chicken that is provided. Be sure and review what causes the curve to
shift and what causes a movement along the curve as well as what determinants affect supply and
what affect demand. Once you have drawn in your change, write a short explanation for
each question discussing what would be the new equilibrium price and quantity levels
due to the change. In other words, has equilibrium price or quantity increased, decreased or
stayed the same, etc. (To draw in changes on the graph in Microsoft Word, you will go to the Insert
menu and select Shapes and then choose lines or arrows to draw in your shifts or show movement
along the supply or demand curves.)

A. In the chicken market, assume there have been substantial technological advancements
made in the production processes for producing chicken. At the same time, consumer

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income has decreased (assume chicken is a normal good).

B. Chicken and beef are substitute products. Assume the price of beef has increased
considerably. What happens in the chicken market?

8. Find an article that identifies a change in supply or a change in demand. Use the article to
fulfill the following instructions and questions:

a) Copy and paste the article into your homework assignment. Be sure and cite
your reference for the article. Indicate the source, author, title, date, and page for
the article you have chosen.
b) Write a short summary addressing the following items:

i. What shift occurred in either supply or demand and in which direction would the
supply or demand have shifted.
ii. What factor changed that caused the shift. Describe the changes in the factor
that have occurred.

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iii. Indicate evidence in the article of whether the market is an international,

national, regional, or local market.

9. Read the article, Europe is Running out of Butter, provided at the following:
a. http://money.cnn.com/2017/08/09/news/economy/butter-shortage-
europe/index.html?iid=hp-stack-dom
b. Answer the following three questions:
i. What factors are affecting the supply of butter in Europe?
ii. What factors are affecting the demand for butter in Europe?
iii. What will happen to the price of butter if the expected shortage materializes?

10. Explain what an externality is and then give an example. How can government correct a
positive externality? How can government correct a negative externality?

Make sure you use correct spelling, grammar, etc. Cite your references used.

Please see the Course Schedule and Course Rubrics pages in the Syllabus Module for due
dates and grading information.