Practice Questions Chapter 1 1. People respond to incentives ...

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Chapter 21. Identify the parts of the circular-flow diagram immediately involved inthe following transactions.a. Mary buys a car from Jaguar for £40,000.b. Jaguar pays Joe £2,500/month for work on the assembly line.c. Joe makes £10 worth of calls on his Vodafone mobile phone.d. Mary receives £1,000 of dividends on her Vodafone shares.2. The following table provides information about the productionpossibilities frontier of Athletic Country.Exhibit 1a. In Exhibit 2, plot and connect these points to create Athletic Country'sproduction possibilities frontier.Exhibit 2b. If Athletic Country currently produces 100 bats and 400 rackets, what isthe opportunity cost of an additional 100 bats?Practice Questions to accompany Mankiw & Taylor: Economics 2
c. If Athletic Country currently produces 300 bats and 300 rackets, what isthe opportunity cost of an additional 100 bats?d. Why does the additional production of 100 bats in part (c) cause agreater trade-off than the additional production of 100 bats in part (b)?e. Suppose Athletic Country is currently producing 200 bats and 200rackets. How many additional bats could they produce without givingup any rackets? How many additional rackets could they producewithout giving up any bats?f. Is the production of 200 bats and 200 rackets efficient? Explain.3. The production possibilities frontier in Exhibit 3 shows the availabletrade-offs between consumption goods and capital goods. Supposetwo countries face this identical production possibilities frontier.Exhibit 3a. Suppose Party Country chooses to produce at point A whileParsimonious Country choose to produce at point B. Which country willexperience more growth in the future? Why?b. In this model, what is the opportunity cost of future growth?Practice Questions to accompany Mankiw & Taylor: Economics 3
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Chapter 221. For each of the follow
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c. If voters must choose between C
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f. What is the value of the GDP def
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d. In the case described above, act
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Chapter 261. Fly-by-night Corporati
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d. Starting at the original equilib
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. Bruce discovers that he has a liv
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. Does the minimum wage have any im
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e. Suppose prices move as you have
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2. a. Suppose private saving increa
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. What happens to the price level a
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