Econ 103 D900 Fall 2013 Tutorial Questions Set 1 September 11th, 2013 __________________________________________________________________

Question 1 Is the following a statement an example of a positive statement or a normative statement: "The rich face higher income tax rates than the poor, which is not good since it is the rich who provide jobs for the poor." Substantiate your answer. This is both positive and normative. The first part is positive, while the second part is normative. Positive is something that can be backed up by fact, while normative is something that is opinion and cannot be backed up by fact. When it says which is not good means its an opinion. It is the rich who provide jobs for the poor fact can be checked, who owns the big companies that provide jobs? Rich people. Two positive parts, 1 normative part. This sentence expresses opinion, so its normative. Its not a matter of how many positive statements. The normative statement is the connecting part of the sentence and is the main point of the statement. Question 2 Consider the following information and answer the questions below: Consider Jake who has to pass Econ 103 in order to graduate. He is taking this course in Fall 2013 and is trying to figure out, which is the best action to take in completing the assignments for this class: working hard or copying down the answers from a classmate. If Jake decides to works hard on the assignments, he must cut down the hours at his part-time job from 15 hrs. to 12 hrs. a week for 13 weeks. Jake works at a fast-food chain and is paid the minimum wage of $ 10 an hour. If Jakes decides to copy down the answers from a classmate, he would do poorly on the exams and fail the course. If Jake retakes the course in Spring 2014 and wants to pass the second time around, he has to work hard on the assignments. To do so, he would again have to cut down the hours at his part-time job from 15 hrs. to 12 hrs. for 13 weeks. Jake is also aware of two other facts: the provincial government has announced that the minimum wage will increase to $ 11 an hour starting January 1st, 2014; and the tuition fees for Econ 103 are $ 800 in each semester. a) Compute Jakes opportunity cost of copying down the answers from a classmate in Fall 2013? b) Briefly explain whether Jakes choice is a Type I choice or a Type II choice? -opportunity cost: what you give up for the next best alternative
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-choice: work hard now or copy off classmates. This is a type 1 choice, he can either do one or the other, not a mix of both. This is an ALL or NOTHING choice -Opportunity Cost of Copying Down -what is he giving up by copying down? $800 in the spring semester (tuition in Spring 2014). Critical because the wage will increase. 11(13)(15-12)+$800. All the stuff hes giving up is the stuff in Spring 2014. This is what you give up from working hard -What is he gaining by copying down? Gaining 3 hrs a week in the fall at $10/hr. -10(13)(15-12). This is the labour income in fall -800+429-390=$839 is how much in addition you would pay if you choose to slack off and copy down the answer Question 3 Mathematical Review of Graphing Linear Relationships and Computing the Slope of a Line Y=a+bx

Question 4 Graphing Relationships among More Than Two Variables Use the table below to answer the following questions. Table 1

a) Given the data in Table 1, holding income constant, draw a graph relating the price of strawberries, measured on the y-axis and the purchases of strawberries, measured on the x-axis. b) Given the data in Table 1, suppose family income decreases from $400 to $300 per week, describe the effect on the relationship between the price of strawberries, measured on the y-axis and the number of boxes of strawberries purchased, measured on the x-axis. c) Given the data in Table 1, holding price constant, draw a graph of the purchases of
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strawberries, measured on the x-axis and family income, measured on the y-axis.