Beruflich Dokumente
Kultur Dokumente
UNIVERSITY
OF
WINNIPEG
Department
of
Economics
ECON
14.1102/3
001
(Intro
to
Economics:
Micro)
Instructor:
Amit
D.
Sinha
TERM
TEST
I
-‐
SOLUTION
October
13,
2009
Duration:
115
minutes
No
electronic
translators
allowed.
(ANSWER
YOUR
EXAM
WITH
A
PEN
ONLY!)
Page
1
of
9
1. Atlantis
is
a
small,
isolated
island
in
the
South
Atlantic.
The
inhabitants
grow
potatoes
and
catch
fresh
fish.
The
accompanying
table
shows
the
maximum
annual
output
combinations
of
potatoes
and
fish
that
can
be
produced.
Obviously,
given
their
limited
resources
and
available
technology,
as
they
use
more
of
their
resources
for
potato
production,
there
are
fewer
resources
available
for
catching
fish.
Maximum annual output options Quantity of potatoes Quantity of fish
(pounds) (pounds)
A 1,000 0
B 800 300
C 600 500
D 400 600
E 200 650
F 0 675
a. [4]
Draw
a
production
possibility
frontier
with
potatoes
on
the
horizontal
axis
and
fish
on
the
vertical
axis
illustrating
these
options,
showing
points
A-‐F.
b.
[4]
Can
Atlantis
produce;
500
pounds
of
fish
and
800
pounds
of
potatoes?
Explain.
Where
would
this
point
lie
relative
to
the
production
possibility
frontier?
Indicate
the
point
on
the
above
graph.
Page
2
of
9
2. Although
he
was
a
prolific
artist,
Pablo
Picasso
painted
only
1,000
canvases
during
his
“Blue
Period.”
Picasso
is
now
dead,
and
all
of
his
Blue
Period
works
are
currently
on
display
in
museums
and
private
galleries
throughout
Europe
and
the
United
States.
a. [4]
Draw
a
supply
curve
for
Picasso
Blue
Period
works.
Why
is
this
supply
curve
different
from
ones
you
have
seen?
b.
[2]
Given
the
supply
curve
from
part
a,
the
price
of
a
Picasso
Blue
Period
work
will
be
entirely
dependent
on
what
factor(s)?
Draw
a
diagram
showing
how
the
equilibrium
price
of
such
a
work
is
determined.
c.
[2]
Suppose
that
rich
art
collectors
decide
that
it
is
essential
to
acquire
Picasso
Blue
Period
art
for
their
collections.
Show
the
impact
of
this
on
the
market
for
these
paintings.
Page
3
of
9
Page
4
of
9
3. Show
in
a
graph
the
effect
on
the
demand
curve,
the
supply
curve,
the
equilibrium
price,
and
the
equilibrium
quantity
for
each
of
the
following
events.
ii.
[2]
Case
II:
There
is
a
big
news
event
in
your
town
that
is
reported
in
the
newspaper.
ii.
[2]
Case
II:
People
have
less
time
to
make
themselves
a
cooked
breakfast.
d. The market for the Krugman, Wells, and Myatt Microeconomics textbook.
i. [2]
Case
I:
Your
professor
makes
it
require
reading
for
all
of
his
or
her
students.
ii.
[2]
Case
II:
Printing
costs
for
textbooks
are
lowered
by
the
use
of
synthetic
paper.
Page
5
of
9
Page
6
of
9
Page
7
of
9
Page
8
of
9
4. Do
you
think
the
price
elasticity
of
demand
for
Ford
sport-‐utility
vehicles
(SUVs)
will
increase,
decrease,
or
remain
the
same
when
each
of
the
following
events
occurs.
a. [3] Other car manufacturers, such as GM, decide to make and sell SUVs.
b. [3]
SUVs
produced
in
foreign
countries
are
banned
from
the
Canadian
market.
c.
[3]
Due
to
ad
campaigns,
Canadians
believe
that
SUVs
are
much
safer
that
ordinary
passenger
cars.
d.
[3]
The
time
period
over
which
you
measure
the
elasticity
lengthens.
During
that
longer
time,
new
models
such
as
four-‐wheel
drive
cargo
vans
appear.
Page 9 of 9