Question 1 – Supply and Demand

1. If the graph above illustrates the disposable camera market, then what is the total amount of money that would be spent at the equilibrium price [EP]? $_____ Calculation:

2. If the market price [MP] is currently $20 then:

a. quantity demanded would be ________ units

b. quantity supplied would be _________ units

c. there is a shortage of _______ units or a surplus of ________ units

3. If the market price [MP] is $14.50 then a. quantity demanded would be approximately ________ units

b. quantity supplied would be approximately _________ units

c. there is a shortage of ______ units or a surplus of ________ units

4. If the MP is currently $16, what specific changes (increase or decrease) would occur in each of the following to restore equilibrium?

a. Quantity supplied would ________ from _____ units to ________ units

b. Quantity demanded would ________ from units ______ to ______ units

c. Market price would ________ from $ _______ to $________.

Question 2- Answer the questions below based on the PPC provided above:

A. What would be the opportunity cost of producing 300 units of Equipment?

B. If the economy represented by the PPC above is currently producing 300 units of Equipment and would now like to produce 120 units of Ice Cream, what would be the opportunity cost?

C. If the economy is currently producing 120 units of Ice-Cream and would like to increase the production of equipment to 240, what would be the opportunity cost?

D. Why does the PPC shown above have a bowed out shape instead of a straight line?

E. What would need to change in the economy in order for the country to produce 200 units of Equipment and 120 units of Ice Cream?

Question 3 – What are your thoughts? “If time, resources, goods & services, and money were unlimited then there would be no need to economize.” Do you agree or disagree with the statement? Justify your answer.

Question 4 – Putting it all together (8 points) In chapters 2, 3 and 4 of your textbook you learned that there are four major resources (land, labor, capital, and entrepreneurship); three primary participants in the economy (households, firms, and the government); two major categories of output (goods and services) and one primary form of payment (money). In the space below, provide a clear and logical explanation of the relationship that exists among the resources, the participants, the output, and the payments.

Question 5– Economic Resources (5 points) Select any company that you know and provide an example of each of the three resources that would be used by that company.

Name of Company selected: __________________________ Example of each resource:

1) Land: _________________________ 2) Labor: ________________________ 3) Capital: _______________________

Question 6 – Economic Principles Two of the economic principles: a) People respond to incentives; b) The cost of something is what you give up to get it. For each of the two principles mentioned, specify and explain tow

A) People Respond to Incentives

B) The cost of something is what you give up to get it.

***I will add models for questions 1 and 2 in files ***