Briefly explain the relationship between the PPC and the supply curve.

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Draw a graph that shows an increase in quantity demanded. On a separate graph, draw an increase in demand.

2. Briefly explain the relationship between the PPC and the supply curve.
3. Would each of the following situations increase, decrease, or not change the demand for movie tickets? If demand will change, draw a graph showing the change in demand.
a) Movies are not available to watch at home
b) The U.S. enters a recession (so incomes until two years after they leave the theater go down)
c) The price of a movie ticket increases
d) The price of popcorn at the theater decreases
e) A new study reports that movie theater screens cause cancer

f) The wages for actors goes up
4. Would each of the following situations increase, decrease, or not change the supply of oil? If supply

) will change, draw a graph representing the change in supply.a) Iran blockades the Strait of Hormuz (through b) A new substitute for oil is inventedwhich most oil from the Middle East is shipped)c) A new technology is developed that allows d) A massive earthquake shakes Russiaoil to be pumped from even deeper reservoirs (a major producer of oil) into the seae) The price of oil fallsf) A new oil field is discovered in Australia

5. Why does a snow storm in Florida in May affect the supply of oranges and not the demand for

oranges, but affects the demand for ice cream and not the supply of ice cream?

6. Ceteris paribus is a Latin phrase that means “all else held constant”. How does the assumption ofceteris paribus apply to the supply & demand model?
7. What will happen to price of apples if there is currently a surplus of apples? Explain everything that

will happen and why it would happen.

8.Restate you answer above so someone with no background in economics would understand whathappened and why.
9. If the price is fixed below the equilibrium price, would consumers be better off or worse off (relative

to if the market was allowed to set the price)?

10. Decide whether each of the following would or would not be include in 2014 U.S. GDP and record

why you think it is or is not included.a) A house in Texas built in 2010 for $500,000 which Kevin bought in 2014 for $1 million Included? Reason?b) 12 uniforms Sai bought for his workers in June 2014 to wear while serving at his NY restaurant Included? Reason?c) The delicious meal Anthony made for his family on August 4, 2014 in Pittsburgh Included? Reason?d) 27 new tractors built in a factory in Indiana in December 2013 and sold in January 2014 Included? Reason?e) 300 kilos of strawberries grown in northern Thailand and sold in Alaskan grocery stores Included? Reason?

11. Based on the results above, come up with a list of things that WON’T be included in GDP.

12. Explain to a second-grader what GDP measures.
13. A criminal runs around Tallahasee smashing windows. How would this affect GDP?
14. Use the following information for a country’s economy (figures in billions of dollars) to

GDP using expenditure approach.Self-employment income 834Personal consumption 7,761Imports 241Depreciation 1,380Government consumption and gross investment 2,075Exports 523Indirect business taxes 339Gross private investment 1,666

15. Complete the calculations for nominal versus real GDP.
Year 1: produced 100 apples & 50 oranges, Pflppics = $1 and Pomi*** = $3
Year 2: produced 110 apples & 55 oranges, P«ppia ? S2 and Pocmgea” $6Use Year 1 as the based year.a) Year 1 nominal GDP »b) Year 2 nominal GDP -c) % A in nominal GDP =d)
 Year 2 real GDP =e) % A in real GDP =

16. Why didn’t 1 ask you to calculate real GDP in Year 1?
17. What does an increase in nominal GDP tell us? What does an increase in real GDP tells us? Which is

most useful and why?

refer attachment for detailed questions

Draw a graph that shows an increase in quantity demanded. On a separate graph, draw an increase in demand.

 

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