Assume that turkey meatball and beef meatball are substitutes, economics assignment help
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Instruction: You need to show the detailed process to reach your answers. Q.1 (20 points) Assume that turkey meatball and beef meatball are substitutes. Also note that turkey and turkey meatball are two different objects. The same caution applies to beef and beef meatball. (1) We observe that the equilibrium price of turkey meatball rises. Explain whether or not a rise in the price of turkey is responsible for this observation. (2) We also observe that the equilibrium quantity of beef meatball drops. Explain whether or not a rise in the price of turkey is responsible for this observation. Q.2(20 points) Bert, as a consumer, places the value on a pair of jeans as follows. Value of first pair: $30 Ernie, as a producer, pays the following cost to produce jeans. Cost of first pair: $12 Using the information given above, answer the following questions. (1) Drive the quantity demanded and the quantity supplied at the price of $19. (2) Derive the equilibrium price and compute the sizes of the consumer and the producer surpluses at the equilibrium price. Q.3 (20 points) Suppose that an analyst conducts a study about the relationship between a firm’s sales revenue and the size of the firm’s acquisition of real estate properties, by examining the data from 200 corporations with annual sales revenue exceeding $200 million. The analyst finds that the more a firm spends for acquiring real estate properties, the more revenue the firm generates in subsequent years. Based on the finding, the analyst concludes that an acquisition of real estate property causes an increase in a firm’s revenue. Someone else who is not involved in the study, however, argues that the conclusion has a problem of ‘reversed causality.’ Provide a possible reason why study’s conclusion could have a problem of ‘reversed causality.’ Q.4 (20 points) (1) , what is the economic meaning of Qx in the inverse demand function? (2), what is the economic meaning of Qx in the demand function? (3) what is the economic meaning of Px in the inverse supply function? (4) , what is the economic meaning of Px in the supply function? Q.5 (20 points) A Korean BBQ restaurant has four workers for washing jobs: Dane, June, Park, and Pola. Each works eight hours a day and can produce two washing services: washing rice bowls and washing grill racks. In an hour, Dane can either wash 100 rice bowls or wash 130 grill racks; June can either wash 130 rice bowls or wash 130 grill racks; Park can either wash 150 rice bowls or wash 100 grill racks; and Pola can either wash 100 rice bowls or wash 150 grill racks. Graph the production possibilities frontier over one day for this restaurant. In the graph, you must identify the points where transfer of a worker from one job to another starts to take place, by showing the coordinates of the points. In answering this question, you must take into account the fact that every worker works eight hours a day. |
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