Homework Assignment 1 - Complete the table and then indicate when diminishing

PRINCIPLES OF ECONOMICS: MACRO

HOMEWORK ASSIGNMENT # 1 (Sections 1-4)

1) Complete the table and then indicate when diminishing returns takes place based on marginal product column. (12 POINTS)

Use the following table and information to answer question # 1. Each worker works a 5 hour shift with a wage of $15.00 per hour. Each Pizza made has a cost of $4 (excluding the labor cost) and the sales price of each widget is $16.

# of Workers

Total # of Pizzas

(Output)

Marginal

Product

Total Cost

Total Revenue

Net Revenue

1

 

12

 

 

 

 

2

 

26

 

 

 

 

3

 

39

 

 

 

 

4

 

50

 

 

 

 

2) Complete the following chart for Net Marginal Benefit. (6 POINTS)

2019 Highest Grossing Movies

Movie Title

 

Production Budget

 

(Cost)

 

 

 

Total Worldwide Earnings

 

Net Marginal Benefit

 

“ Avengers: Endgame”

 

$ 356 million

 

$ 2,798 million

 

“ The Lion King”

 

$ 260 million

 

$ 1,657 million

 

“ Toy Story 4”

 

$ 200 million

 

$1,073 million

 

“Frozen 2”

 

$ 150 million

 

$1,402 million

 

 

“Captain Marvel”

 

$ 152 million

 

$ 1,128 million

 

3) You have an opportunity to work 5 hours overtime and earn 1.5 times your usual rate of $20 per hour. However, a total of $37 will be taken out for taxes. You parked in the parking garage and will have to pay $5 total to park for the additional hours. You also didn't pack an extra meal, which you already have in the refrigerator at home. You will have to spend $8 for food. According to the marginal principle and everything else equal; will you work the overtime? (Show your work: marginal benefit, marginal cost and net marginal benefit/loss) (9 POINTS)

4) You shop online and have a budget of $1,000. You want to buy a Chromebook for $350, a 4K LED TV for $500 and two new Nintendo switch games for $100 OR a new smartphone for $1,000. You end up buying the smartphone for $1,000. The store also sells clothes, furniture, and video games. In this example explain what is your opportunity cost? (Explain your answer) (7 POINTS)

5) Complete the following table. Include the amount and indicate if it is a surplus or shortage. (5 POINTS)

 

Year

 

Federal

 

Revenue

 

(in billions)

 

Federal

 

Expenditures

 

(in billions)

 

Budget Surplus (+)

 

or

 

shortage (-)

 

 

 

1

 

2

 

3

 

4

 

5

 

 

$2,785.3

 

2,531.8

 

2,153.6

 

2,524.0

 

3,105.9

 

 

$1,967.0

 

2,657.4

 

2,362.0

 

2,982.6

 

2,518.2

 

____________

 

____________

 

____________

 

____________ ____________

 

 

6) List and define the three main legal forms of business ownership. (Main categories) (12 POINTS)

Using the graph below answer questions 7-10

image1.wmf

7) What is the market equilibrium price? (6 POINTS)

8) What is the market equilibrium quantity? (6 POINTS)

9) At $2 is there a surplus or shortage and what is the amount of it? (6 POINTS)

10) At $4 is there a surplus or shortage and what is the amount of it? (6 POINTS)

Use the following graphs to answer questions 11-15. NOTE: this is not matching so a graph may be used more than once or not at all.

image2.wmf image3.wmf

11) Which graph would illustrate a market situation for a fashion item that becomes more popular with consumers? (5 POINTS)

12) Which graph would illustrate a market situation where a natural disaster destroys a portion of a crop? (5 POINTS)

13) Which graph would illustrate a market situation where people are trying to be healthy so they avoid a particular food item? (5 POINTS)

14) Which graph would illustrate a market situation where technology now makes it easier and cheaper to produce a product? (5 POINTS)

15) Which graph would illustrate a market situation where a good marketing campaign makes consumers want a certain product more? (5 POINTS)