- When the price of CD increased from $10 to $11, the quantity of CDs demanded decreased from 100 to 87. Using the mid-point formula:
- What is the price elasticity of demand for CDs?
- Is demand elastic or inelastic?
- When the price of paper increases from $100 to $104 per ton, the quantity supplied increased from 200 to 220 tons per day. Using the mid-point formula:
- What is the price elasticity of supply for paper?
- Is the supply elastic of inelastic?
- If firm wants to increase its total revenue, should it raise or lower its prices? Explain your answer.
Chapter 6 – GDP and Economic Growth
- Do increases in gross domestic product necessarily means into improvement in the standard of living of the citizens? Explain your answer.
- Someone said. “Trade deficits are good because we are buying more goods than we are producing.” What is the downside of trade deficits?
- What factors determine technological progress?
Chapter 7 – Unemployment and Inflation
- What is unemployment? Why can’t it be driven down to zero?
- Supposed the government hires workers who are currently unemployed but does not give them any work to do.
- What will happen to the measured unemployment rate?
- Is this an accurate reflection of the underlying economic situation?
- Critically evaluate the following statement: “Hong Kong is an expensive place to live. They must have a high inflation rate in Japan.”
Chapter 12 – Money and Banking
- Why do all societies have some form of money?
- If people never withdrew cash from banks,
- How much money could the banking system potentially create?
- Could this really happen?
- What might limit deposit creation in this case?
Chapter 13 – Monetary Policies
- Refrigerators and clothing are, to some extent durable. Explain why the decision to buy a refrigerator is likely to be more sensitive to interest rates than the decision to buy clothing.
Chapter 15 – Globalization and Trade
- Why do both rich and poor countries benefit from trade?
- If the dollar increases in values against the Japanese Yen, how will this affect the balance of trade between the United States and Japan?
- Consider two financial planners, Phil and Frances.
- In an hour, Phil can either produce one financial statement or answer 10 phone calls
- In an hour, Frances can either produce three financial statement or answer 12 phone calls?
- Who has the absolute advantage?
- Who has the comparative advantage?