Market Equilibrium
INSTRUCTIONS: 1. Read questions carefully. Answer completely. 2. All five answers should be in one Word document. 3. Write your name at the top of the document. 4. Submit the document through Canvas. (25 pts) 1. Economics is the study of how economic units make choices. In the context of this definition, explain how you would spend/invest $500,000, which you just inherited. The $500,000 would be used for only the one alternative chosen. You are thinking of the following four alternatives: Purchase a new condominium in Hawaii as a vacation home. Invest in a relatively safe mutual fund, which typically averages a return of 10%. Take three friends on a month long vacation around the world. Donate the $500,000 to your favorite charity. Make sure that your answer addresses the five factors to be considered when making a decision/choice. (5 pts each for the five factors) (25 pts) 2. You are getting ready to go shopping at the Apple store for an Apple Pencil. Explainthe following concepts in the context of shopping for the Pencil at the Apple store. a) What would cause a change in the quantity demanded? What would cause a change in the demand for the Pencil? (6 pts) b) Discuss the Pencil in the context of inferior good and normal good. (3 pts) c) Discuss the Pencil in the context of complementary good and substitute good. (3 pts) d) Discuss the Pencil in the context of the price elasticity of demand. (5 pts) e) Discuss the Pencil in the context of market equilibrium. (4 pts) f) Discuss the Pencil in the context of a change in supply. (4 pts) (20 pts) 3. Answer the following questions with regard to the public sector: a) Explain and provide an example of a public good. (4 pts) b) Explain and provide an example of a positive externality and a negative externality. (4 pts) c) Explain and provide an example of a common property rights. (4 pts) d) Explain and indicate the amount of the United States Federal Budget Deficit. (4 pts) e) Explain and indicate the amount of the United States National Debt. (4 pts) (20 pts) 4. In the context of our class discussions, explain the following: a) how the level of wealth could be determined for a country. Indicate the three metrics discussed in class. Be sure to include why the metrics are appropriate. (5 pts) b) explain which resources or factors contribute to the level of wealth for a ? ? country. (15 pts) (10 pts) 5. In class on Thursday, November 19th, we watched an MSNBC video, featuring NYU Professor Scott Galloway. In the video, Professor Galloway was asked about whether or not stimulus money should have been given to businesses or individuals. a) What was his opinion and what was the basis of that opinion? (5 pts) b) What is your opinion as to whom the stimulus money should have been distributed? (5 pts)
