Economics questions
20 Questions. Answers should be 100-150 WORDS Each and draw the handwritten graph where it is needed and paste it in word file with your answers. No Plagiarism. Due in 36 hours.
Chapter 1and 2
Q1. Why is the study of economics an important part of social science? Give an example from the real world.
Q2. If the real wage rate (adjusted for inflation) declines for jobs for high school graduates, would the true opportunity cost of attending college or spending for higher education decline? Give an example.
Q3. How do you measure the efficiency of resource allocation? Give an example from a real-world application of measuring the efficiency of resource allocation
Q4)
Q5. Define and describe the concept of opportunity cost with an example. What would be your opportunity cost for taking online classes to get a degree at the University of Massachusetts Boston (UMB) compared to taking traditional face-to-face classes at UMB or elsewhere? Provide examples in your answers.
Q6. Draw a supply-demand diagram of the market for rental apartments in Boston in the neighborhoods surrounding UMB.Illustrate the effect on monthly rents because of increased public funding from the State of Massachusetts and a simultaneous increase in enrollment capacity for freshman year admission by the university with no increase in tuition and fees.Explain your hypothetically drawn diagram in your own words.
Q7. Suppose the geopolitical tension in the Arab states in the Middle East and Persian Gulf region has severely disrupted oil exports to the United States. Illustrate and explain in your own words the effect on the price of natural gas and the quantity demanded equal to the quantity supplied in the US market because of this decline in the supply of petroleum (fossil fuel) from the Middle East and the Persian Gulf. Hint: please assume that petroleum and natural gas are substitutes.
Q8. Suppose the government passed a new legislation for stricter safety and fuel efficiency conditions on the manufacture of new automobiles. Draw a demand and supply diagram and then illustrate and briefly explain the effect of such legislation on the equilibrium price and the quantity of newly manufactured vehicles vis–vis the market for used vehicles (draw two different diagrams for new and used vehicles).
Q9. Suppose the ticket prices for next years Super Bowl were announced a year ahead at a range from $1,000 to $25,000, with rates in between for all categories of seats for the stadium. Without any prior information regarding what teams will play, briefly explain why these price ranges do not reflect the true market price of Super Bowl tickets. Do you expect to see the actual market prices much higher, lower, or exactly the same? Why?
Q10. Ed Sheeran, a British pop and rock singer, was scheduled to perform a concert on September 14, 2018, at 7 p.m. at Gillette Stadium in Foxboro, Massachusetts. The ticket price ranges are from $62 to $8,668. Based on your knowledge of the D and S model for the music entertainment market, briefly explain whether these price ranges truly reflect the market prices. Why or why not?
Chapter 3 and 4
Q1. While defining the concept of market efficiency, briefly describe the theoretical basis for measuring efficiency under a perfectly competitive market.
Q2. What are the sources of market failure? Provide a real-world example.
Q3. What is the rationale for government intervention in economic and market activities?
Q4. Briefly describe the causes of the Great Depression of the 1930s.
Q5. What is Keynesian economics? How did it combat the Great Depression of the 1930s?
Q6. Based on the concepts of the law of demand and the law of supply in microeconomics, explain the difference between changes in quantity demanded (and/or changes in quantity supplied) and changes in demand (and/or changes in supply). Provide a real-world example and draw a graph. Provide an explanation for the graph. No specific data is required for drawing the graph.
Q7. How do you distinguish between the concepts of the D and S functions in microeconomics and the concepts of the AD and AS functions in macroeconomics? Why they are different?
Q8. Briefly explain how the problem with information asymmetry caused the financial collapse on Wall Street and financial trouble in the health-care service industry. Provide an example for each of these cases.
Q9. From your own real-life experience, provide an example of adverse selection and its possible moral hazard. How would it be possible to avoid or at least minimize the problem of adverse selection and moral hazard?
Q10. Make a list of the pros and cons of the individual mandate of Obamacare. Running Head:ASSIGNMENT 1
7
ASSIGNMENT
Q6. In your own opinion, provide at least two pros and two cons of government intervention in a free market system with examples.
Government intervention is accompanied by several advantages such as, provision of goods which are not provided in the market, provide quality goods underprovided in the free market, reduction inequality and poverty through tax and benefit system, and also bound monopoly power (Wang, 2018).
However, despite the many benefits, it has some disadvantages, such as incentives effects on an increase in taxes and welfare programs. Consequently, Government interventions may lead to fewer choices of commodities. An example of government intervention in the health sector, the government can offer universal health care to prevent people from dying unaffordability health services. In this way, it can improve the long term labour productivity as workers with better health care who can work for longer hours without applying for sick leaves
Q7. How do you distinguish between the concepts of the D and S functions in microeconomics and the concepts of the AD and AS functions in macroeconomics? Why are they different?
In microeconomics supply and demand is an economic model of price estimation in the market, it suggests that holding both demand and supply equally in a competitive market change, the unit price for a specific commodity or other traded thing changes until it arrives at a point when the amount demanded will be the same as the amount required which will lead in an economic equilibrium of the cost and the amount transacted.
Aggregate supply is the total amount of goods and services that organizations are willing to vend at a given price in a country. On the other hand, aggregate demand is the overall amount of goods and services that will be bought at the possible price levels. Both the AS and AD are plotted together to determine the equilibrium in macroeconomics (Agnor & Montiel, 2015).
Q8. Briefly explain how the problem with information asymmetry caused the financial collapse on Wall Street and financial trouble in the health-care service industry. Provide an example for each of these cases.
The Wall Street crash that happened in 1929 was the major American stock market crash. It is began in September and came to an end in October, a time when the share prices on the New York Exchange distorted. The key factor that caused the collapse was the overproduction of agricultural yield, which created economic anguish among the American agronomists. The stock crash led straight to the great depression in Europe when stocks were nosedived on the New York stock exchange.
It led to disruption on the worldwide system funding, trade and manufacture, and the consequent meltdown of the American economy, which was also experienced in Europe. The employed workers went on strike, demonstrated in public to call for public attention.
Q9. From your own real-life experience, provide an example of adverse selection and its possible moral hazard. How would it be possible to avoid or at least minimize the problem of adverse selection and moral hazard?
Moral hazard and adverse selections are vital concepts related to the problem of the information gap in extremely many markets. Moral hazard takes place when the insured clients have a higher likelihood of taking huge risks knowing that entitlement will be paid by their cover. The customers are more aware of her intended action more than the producer (Pauly, 2015)
An example of a moral hazard is when the bank is of the controversial issue of bank bailout for and a bank is aware that there is a good opportunity for it to get extra financial support when its experience problems. An illustration of an advance selection is in medical insurance. Most people who are likely to purchase health insurance are those who are sure they will use it.
Q10. Make a list of the pros and cons of the individual mandate of Obamacare.
Obamacare, also referred to as the affordable act (ACA), was signed to law in 2010, to provide affordable medical insurance to Americans. It was also designed to protect consumers from insurance company tactics that might increase costs in hospitals (Rice et al. 2018). Some of the advantages of the ACA are, millions of Americans have obtained health insurance, medical services are affordable to many people, reduction in the cost of prescribed drugs and also people with prevailing medical conditions cannot be denied coverage, However, despite the many benefits of ACA it also has some disadvantages such as many people are required to pay for premiums, increase it taxes and also fines for people without insurance coverage.
References
Agnor, P. R., & Montiel, P. J. (2015). Development macroeconomics. Princeton university press.
Garcia, P., Irwin, S. H., & Smith, A. (2015). Futures market failure?. American Journal of Agricultural Economics, 97(1), 40-64.
Himmelberg, R. F. (2016). The Great Depression and the New Deal. Westport, CT: Greenwood Press.
Mearman, A. (2019). Post Keynesian economics and the environment: waking up and smelling the coffee burning?. International Journal of Green Economics, 1(3-4), 374-380.
Pauly, M. V. (2015). The economics of moral hazard: comment. The american economic review, 58(3), 531-537.
Rice, T., Unruh, L. Y., van Ginneken, E., Rosenau, P., & Barnes, A. J. (2018). Universal coverage reforms in the USA: From Obamacare through Trump. Health Policy, 122(7), 698-702.
Wang, J. (2018). Innovation and government intervention: A comparison of Singapore and Hong Kong. Research Policy, 47(2), 399-412.
Zhao, X. G., Jiang, G. W., Nie, D., & Chen, H. (2016). How to improve the market efficiency of carbon trading: A perspective of China. Renewable and Sustainable Energy Reviews, 59, 1229-1245.
