Sie sind auf Seite 1von 9

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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.  

c.  [2]   What   is   the   opportunity   cost   of   increasing   the   annual   output   of  


potatoes  from  600  to  800  pounds?  

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.  

a. The  Market  for  newspapers  in  your  town.  

i. [2]  Case  I:  The  salaries  of  journalists  go  up.  

ii.  [2]  Case  II:  There  is  a  big  news  event  in  your  town  that  is  reported  
in  the  newspaper.  

b. The  market  for  Edmonton  Eskimos’  football  cotton  T-­‐shirts.  

i. [2]  Case  I:  The  Eskimos  win  the  Grey  Cup.  

ii.  [2]  Case  II:  The  price  of  cotton  increases.  

c. The  market  for  bagels.  

i. [2]  Case  I:  People  realize  how  fattening  bagels  are.  

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  

Das könnte Ihnen auch gefallen