Grantham ECN201 2022 November Complete Course Latest (Full)

ECN201 Microeconomics

Week 1 Discussion

Scarcity and choice are the two essential ingredients of economic analysis.  A good is scarce when the human desire or need for it exceeds the amount freely available.  As a result, society must choose the most efficient manner of allocation of those scarce resources.

Based upon scarcity and choice, why is it not possible for governments to efficiently provide everyone with free healthcare and free higher education without there being negative effects to the aggregate economy?

Think about society's need to choose amongst competing resources and goals.  How does personal gain affect choices by individuals and government?  Opportunity costs.  While we want to do one thing, we can't do others based upon scarcity and opportunity costs.  Resources are finite.  What about incentives as opposed to free offerings?

 

ECN201 Microeconomics

Week 2 Discussion

Markets seek equilibrium, and the demand for goods and services will come to an equilibrium with supply of goods and services.  When markets are not in equilibrium, surpluses and shortages, as well as underground markets, can exist.  Sometimes, the government may want to intervene in markets to try to help reduce economic hardships.       

Analyze the impact of an increase in the minimum wage from the current level to $15 per hour.  How would the following be affected?

a.  employment of people previously earning less than $15 per hour

b.  the unemployment rate of teenagers

c.  the availability of on-the-job training for low-skilled workers

d.  the demand for high-skilled workers who are good substitutes for low-skilled workers

Review the mechanics of price floors and price ceilings.  Why does a price floor lead to surpluses?  Why does a price ceiling lead to shortages?  Review consumer and producer surplus.  A price floor will lead to a transfer of consumer surplus to producer surplus; a price ceiling will lead to a transfer of producer surplus to consumer surplus; both price regulations lead to deadweight losses, which is a loss of surplus to society.  Why?

 

ECN201 Microeconomics

Week 3 Discussion

Politicians have a strong incentive to follow a strategy that will enhance their chances of getting elected and re-elected.  Political competition more or less forces them to focus on how their actions influence their support among voters and political contributors.

What is market failure, and what kinds of things can lead to market failure?  What is government failure?  Can government failure lead to market failure?Review concepts like shortsightedness and rent seeking.  What are the effects of government intervention in markets with some of the price regulations like price floors and price ceilings we discussed in chapter 4?

ECN201 Microeconomics

Week 4 Discussion

Recent research confirms that the demand for cigarettes is not only price inelastic, but it also indicates smokers with incomes in the lower half of all incomes respond to a given price increase by reducing their purchases by amounts that are more than four times as large as the purchase reductions made by smokers in the upper half of all incomes.

How can the income and substitution effects of a price change help explain this?

Review price elasticity of demand and supply.  Price elasticity describes the sensitivity between quantity demanded/supplied and price when a change in price occurs.  A relatively lower change in quantity versus a change in price means the product is more price inelastic; a higher relative change in quantity versus a price change indicates more price elastic.  Review the substitution effect and income effect dynamics.

 

ECN201 Microeconomics

Week 5 Discussion

To maximize profit, a price taker will expand its output as long as the sale of additional units adds more to revenues (marginal revenues) than to costs (marginal costs).  Therefore, the profit-maximizing price taker will produce the output level at which marginal revenue (and price) equals marginal cost.

In a price-taker market, if a business produces efficiently (i.e., that is, where marginal revenues = marginal costs), the firm will be able to make at least a normal profit.  True of False.  Explain.

All firms produce where MR=MC.  Price takers produce and price where P=ATC=MC=MR.  That is the "normal profit" level.  Profits above that level are considered "economic profits."  Review economic profits, normal profits, explicit costs, and implicit costs.

 

ECN201 Microeconomics

Week 6 Discussion

A profit-maximizing price searcher will expand output as long as marginal revenue either exceeds or is equal to marginal cost, lowering its price or raising its price until the midpoint of their demand curve and highest total revenues are achieved. 

Why are oligopolies able to earn both short-run economic profits and long-run economic profits, while price taking firms like perfect competitors can only earn short-run economic profits?

Review the characteristics of perfect competition and imperfect competition (monopolistic competition, oligopoly, and monopoly).  Barriers to entry don't exist for perfect competition, but barriers to entry exist for imperfect competition.  What are the implications of barriers to entry to the firm and competition?  Review consumer surplus and producer surplus; what happens to consumer surplus is price is above equilibrium, or in this case above normal profits?

 

 

 

ECN201 Microeconomics

Week 7 Discussion

Profit-maximizing firms will hire additional units of a resource up to the point at which the marginal revenue product (MRP) of the resource equals its price.  With multiple inputs, firms will expand their use of each until the marginal product divided by the price (MP/P) is equal across all inputs

What is the link between marginal revenue product and wages?  Due to there being discrepancies between the productivity and resource offerings (i.e., education, skills, experience) in labor markets, is it justified for one employee with a higher marginal revenue product to earn a higher wage than an employee with a lower marginal revenue product?  Does this notion of marginal revenue product and wages conflict with minimum wage laws?

Review the mechanics of demand and supply.  How does marginality work in economics?

 

ECN201 Microeconomics

Week 8 Discussion

Imports increase the domestic supply and lead to lower prices for consumers.  Exports reduce the domestic supply and push price upward.  The net effect of international trade is an expansion in total output and higher income levels for both trading partners (law of comparative advantages).

"Imports destroy jobs; exports create them.  The average American is hurt by imports and helped by exports."  Do you agree or disagree with this statement?  Explain and support.

Review absolute and comparative advantages.  Personal private property protection allows for greater entrepreneurial ventures, and thus an expanding economy and job growth; can import tariffs and quotas reduce the benefits of trade?  Review the mechanics of import tariffs and quotas and world price.

 

ECN201 Microeconomics

Week 1 Assignment

Democracy and Taxes

After reading Special Topic 1 and Special Topic 2, write a 2-page paper answering and describing:  Can democracy survive if a majority of the citizenry pay little or nothing in taxes while benefiting directly from a higher level of government spending?  Why or why not?  Discuss.

 

ECN201 Microeconomics

Week 2 Assignment

Changes to Supply, Quantity Supplied, Demand, and Quantity Demanded

Using the table, for each line item and its associated column, describe how the market for each specific product will be affected by the associated event indicating whether it will rise, fall, or no change.  For example, in the first line item for the market of corn, based upon the event of a severe drought, the price will either rise or fall or no change, demand curve will shift left (fall) or right (rise) or no change, supply curve will shift left (fall) or shift right (rise) or no change, quantity demanded will rise, fall, or no change, and quantity supplied will either rise, fall, or no change.

Event

Market for:

Price

Demand Curve

Supply Curve

Quantity Demanded

Quantity Supplied

A severe drought hits the Midwest corn growers

Corn

The U.S. government reduces taxes on imported lumber

New Home Building

The federal government raises the minimum wage from $7.25 per hour to $11.00 per hour

Minimum wage jobs

Technology improves for automobile assembly

Autos

 

ECN201 Microeconomics

Week 3 Assignment

Housing Collapse Paper

After reading Special Topic 5, write a 2-page paper answering the following:

Why did housing prices rise rapidly during 2002 - 2005?

Why did the mortgage default rate increase so sharply during 2006 and 2007 even before the 2008 - 2009 recession began?

What did the Community Reinvestment Act have to do with the housing bubble and collapse?

Cite your sources as needed.  Use APA formatting.

 

ECN201 Microeconomics

Week 4 Assignment

Causes of the Great Depression

After reading Chapter 7 and Special Topic 6, write a 2-page paper answering the following question:

Contrary to a popular view, the Great Depression was not caused by the 1929 stock market crash.  We have had similar reductions in stock prices to those in 1929 before and after the Great Depression.  What historical events took place that directly led to the prolonged depressed conditions like those of the 1930s?

Cite your sources as needed.  Use APA formatting.

 

ECN201 Microeconomics

Week 5 Assignment

Costs Table

Directions: Fill in the table.

Units of Output

Total Costs

Total Fixed Costs

Total Variable Costs

Average Total Costs

Average Fixed Costs

Average Variable Costs

Marginal Costs

0

 $1,000

 $1,000

 $0

1

1,200

2

1,350 

3

1,550 

4

1,900 

5

2,300 

6

2,750 

7

3,250 

8

3,800 

9

4,400 

 

ECN201 Microeconomics

Week 6 Assignment

Firm Profit, Loss, and Shut Down

Based upon the graph, answer the following questions:

1) What is the production level that will maximize the profit for the firm?

2) What is the profit-maximizing price the firm will charge?

3) Will the firm incur an economic gain or economic loss?

4) What will the dollar amount of economic gain or economic loss be?

5) What will be the price and quantity where the firm will shut down?

 

ECN201 Microeconomics

Week 7 Assignment

Labor and Wages

The following chart provides information on

 firm that hires labor competitively and sells

its product in a competitive market.

Units of Labor     Total Output     Product Price

1                            14                        $5

2                            26                        $5

3                            37                        $5

4                            46                         $5

5                            53                         $5

6                            58                        $5

a.    How many units of labor would be employed if the market wage rate were $40? Why?

b.    What would happen to employment if the wage rate rose to $50? Explain your answer.

 

ECN201 Microeconomics

Week 8 Assignment

Trade Restrictions - Tariffs

Directions: Answer the questions below based on the graph.

1. How many units will the domestic firms produce without trade?

2. How many units will the domestic firms produce without a tariff if the foreign producer can sell the product at a $4 price?

3. How many units will the foreign firms produce / sell if a government tariff of $2.00 is imposed on foreign goods?

4. What will be the total government revenues if a tariff of $2.00 is imposed on foreign goods?

5. What will be the total deadweight losses if a tariff of $2.00 is imposed on foreign goods?

 

ECN201 Microeconomics

Final Exam

 

1. The four types of market structures we study in economics are perfect competition, monopoly, oligopoly, and monopsony.

2. The long run is considered to be the period when a firm's inputs are mainly variable and at least one input is fixed.

3. The government regulates a pure monopoly by setting price where AVC (average variable costs) = D (demand).

4.  Monopolies, since no close substitutes nor competitors exist, can price whatever they want and still maximize total revenues.

5. As competition increases in markets, the demand curve for products becomes more price elastic and downward pressure on prices tends to ensue.

6. As an imperfect competitor produces more and more output, we can assume that eventually marginal costs will continue to rise and marginal revenues to fall.

7. Generally speaking, consumer surplus will be highest in a perfectly competitive market structure.

8. The point where imperfect competitors will price their products and earn the highest level of total revenues is at the midpoint of the demand curve where total revenues are highest on the total revenue curve.

9. In general, we can expect higher barriers of entry for a monopolistically competitive market structure than an oligopoly market structure.

10. Monopolistic competition would represent the market structure within which Coca-Cola and Pepsi Cola firms operate

11. The perfect competitor can produce as much as it wants or as little as it wants with no effects on market price whatsoever.

12. Oligopolies and monopolies attempt reduce output and raise price, thereby incurring overcapacity and waste to society.

13. Redistribution of income from wealthier individuals to lower-income individuals by government in the form of higher taxes and progressive tax systems actually tends to lower prosperity because it weakens the link between productive activity and the reward derived from it, encourages resources to flow into wasteful rent-seeking activities, as well as higher tax rates required to finance redistribution result in resources being devoted toward tax avoidance activities

 14. Decreasing the percentage tariff price on an imported good will result in greater market share for the foreign producer in the domestic country.

15. Which market structure can earn long-run economic profits?

a. Perfect competition

b. Monopolistic competition

c.  Oligopoly

d. Monopoly

e. C and D only

16. All firms produce where

a.  Marginal revenues are greater than or equal to marginal costs

b. Average total costs are greater than marginal costs

c. Short-run profits are less than long-run profits

d. Marginal benefits are greater than marginal profits

17. A perfect competitor is a               and can earn economic profits  

a. Price taker, in both the short run and long run

b. Price maker, never

c. Price taker, in only the short run

d. Price maker, in only the long run

e. Price maker, in both the short run and long run

18. The upward-sloping portion of a long-run average total cost curve is the result of

a. Economies of scale

b. Diseconomies of scale

c. Diminishing returns

d. The existence of fixed resources

19. The law of diminishing marginal returns explains the general shape of the firm’s

a. Both short-run and long-run cost curves.

b. Short-run cost curves

c. The laws of diminishing returns has nothing to with cost curves

d. Long-run cost curves

20. Which of the following labor resources will likely have the most inelastic supply schedule in the short run?

a.  Filling station attendants

b. Sales clerks

c.  Dentists

d. Construction laborers

21. If Congress suddenly passes legislation that required all U.S. workers to receive the same annual pay, we would expect

 a. Less human capital investment

b.  A shortage of workers to fill the least desirable jobs

c.   A surplus of workers to fill the easy, desirable jobs

d. All of the above

22. Economic profit

a. Does not exist in competitive markets

b. Provides incentive for investors to undertake risky projects

c. Motivates entrepreneurial innovation

d. Does all of the above

e. Is both b and c

23. The demand curve of the perfect competitor is

a. Perfectly inelastic

b.   Downward sloping

c. Perfectly elastic

d. Upward sloping

24. An import tariff on an imported good will result in

a. Higher domestic consumer prices for that good

b.  Increased market share for the domestic producer

c. Increased revenues for the domestic government

d. Deadweight losses to society

e. Only a,b, and c.

 f. a,b,c, and d.

25. A nation benefits from international trade if it

a. Imports more than it exports

b. Exports good for which it is a low opportunity cost producer

c. Imports good for which it is a low opportunity cost producer

d. Exports more than it imports.