Problem Set #1
Due on Sep 14 at the beginning of class. Please turn in your answers via uploading them on . You may use your computer to type your answers and draw graphs, or you may use pen and paper and upload your work as scanned images. (photos are fine)
1. Use a circular low diagram and identify each of the following in terms of where it is located on the diagram, as well as, where each money flow is located associated with each activity.
(a) Sam buys a $2 for a bottle of milk from Walmart.
(b) Sally works at McDonalds and earns $8.50 per hour.
(c) Serena spends $15 to see an IMAX movie.
(d) Stuart earns $100,000 from his 0.1% ownership in Stark Industries.
2. Explain whether each of the following is a normative or a positive statement.
(a) There is a trade-off between working more and enjoying more leisure.
(b) The government should provide tax cuts to boost economic growth.
(c) A recent decrease in demand led to a decrease in the price of orange juice.
(d) The main goal of the federal government should be to promote economic growth.
3. Write down and explain one example of a recent decision you made in your life, where you weighed marginal cost and marginal benefit.
4. Explain whether each of the following would be a topic studied in Microeconomics or Macroeconomics:
(a) The unemployment claims in the United States was 6.9 million in March 2020.
(b) Amazon decides decrease the number of employees at their office in Seattle and transfer a portion of the IT work to India.
(c) An unexpected heat in Georgia reduced the peach crop and caused the price of peaches to rise.
(d) The U.S. output, adjusted for inflation, decreased by 32.9% in the second quarter of 2020 according to the Bureau of Economic Analysis.
(e) Last month Wells Fargo Bank lowered its interest rate on loans to 0.01%.