Economics (Supply/demand curves)

Please keep the answers short and simple, nothing absolutely ridiculous where you look like a freakin professor. More info on how to answer the questions is in the homework advice PDF which was literally provided by the professor.

 

I NEED THESE BY 12PM EST 2/12/2013

 Homework assignment is sss

Short Answer and Graphing Questions

General Directions: Please read the “Homework Advice” handout in the Handout Archive
before doing these questions. All work must be excruciatingly neat. All written work must be
legible, all graphs completely labeled. All written answers must be put in your own words.
Answers must be coherent, cogent, complete, and concise.

1) For each of the following, use supply and demand diagrams to illustrate the shift that occurs
in the specified market. Be sure to identify the market, label all axes and curves, show the initial
and final equilibrium values for price and quantity, and use arrows to indicate the direction of the
shift. (Note: all 7 of these graphs could probably be put on one or 2 sheets of paper if done
neatly and carefully.) 14 points

a) Gillette produces an advanced 3-blade razor. Schick is about to introduce a new 5 blade
razor, with a convincing ad campaign claiming that it produces a superior shave. Show the
effect of this introduction on the market for Gillette’s 3-blade razor.

b) In the early 1800’s, able bodied seamen (ABS) were skilled sailors sought after by both
merchant and naval vessels. Consider the market for able bodied seamen. With the rise of
Napoleon, England expanded its navy dramatically, from 80 naval vessels to more than 400.
Show the effect of this expansion on the market for able bodied seamen.

c) In times of war, the British navy sometimes “impressed” sailors from merchant ships. In
other words, British naval ships would stop merchant vessels from various countries at sea, and
forcibly take British-born able bodied seamen to serve in the British Navy. (In practice, they
often took any able bodied seaman who even spoke English, whether they were British or not.
This was one cause of the War of 1812.) Consider the information in question again. Show the
effect of the expansion of the British navy on the market for merchant able bodied seamen
specifically, in other words, those serving on merchant ships.

d) The DEA often auctions off cars seized in drug raids. The number of cars at each auction is
fixed, and they are simply sold to the highest bidder. In 2004, the DEA scheduled an auction of
220 luxury cars in sunny southern Florida. On the day of the auction, a series of severe
thunderstorms pelted southern Florida with high winds and heavy rains. The auction was held
anyway. Show the effect of this weather on the market for these luxury cars.

e) Nylon was invented shortly before WWII. A wonderful new fiber, nylon could be used for
making a variety of products, including stockings for women, and parachutes for pilots. When
WWII broke out, the government began buying up all of the supplies of nylon to make
parachutes for military aviators. Show the effect of this action on the market for women’s nylon
stockings.

f) Patents grant an inventor sole commercial rights to their invention for a period of time. Drug
makers have received patents for a large number of drugs over time including Liptor
(atorvastatin calcium), Zoloft (sertraline HCl), Zithromax (azithromycin), Nexium (esomeprazole
magnesium), etc. When that patent protection expires, competitors are free to introduce generic
versions of the original drug. Consider the market for Lipitor (atorvastatin calcium), produced by
Pfizer. Lipitor’s patent protection expires in 2010. Show the effect of patent protection
expiration on the market for Lipitor.

g) Consider the information in question (f) again. Show the effect of the loss of patent
protection on the market for atorvastatin calcium.

2) Estaban has two fields on his farm near Vallencia, Spain where he can grow oranges and
olives. Field 1 is 100 acres in size. It can produce 400 bushels of oranges per acre or 300
bushels of olives. Field 2 is 200 acres in size and can produce 600 bushels of oranges per acre
or 800 bushels of olives per acre.
a) Draw a separate production possibilities frontiers for each of these fields.
b) Calculate the opportunity cost of oranges in Field 1 and the opportunity cost of oranges in
Field 2.
c) Draw an overall PPF for Estaban’s farm.
d) Suppose Estaban wishes to produce 20,000 bushels of oranges. How many acres should
he devote to oranges? What is the maximum number of bushels of olives he could produce if
he produces this quantity of oranges? What is the OC of another bushel of oranges at this level
of orange production?
e) Suppose Estaban now wishes to produce 120,000 bushels of oranges. How many acres
should he devote to oranges? What is the maximum number of bushels of olives he could
produce if he produces this quantity of oranges? What is the OC of another bushel of oranges
at this level of orange production? 12 points

How to answer a question…and get lots of points

You’ve been to class, taken good notes, read the book, and studied. You know the material!
That’s great, but it’s not enough to ensure that you do well on a written exam. You need to show
your instructor that you know the material. Don’t leave any doubt in his mind. Here’s some
advice on how to do that when you are faced with short answer/essay/story problems.

1) Answer the question that was asked.
• Don’t dance around it. If the question asks, “What happened to employment?” don’t say,

“More people want to have jobs.” Don’t even say, “Unemployment went down.”
Neither of those actually answers the question. Instead say, “Employment went down.”
Or, “Employment went up.” Then go on to explain why you know that to be true.

2) Use evidence from the problem.

• Refer back to the information in the story problem to support your arguments. If the
problem mentions that there are a lot of empty seats at a concert, use this evidence of a
surplus to back up your argument that ticket prices are above equilibrium. If it talks
about labor productivity increasing, cite that fact to support your contention that the PPF
is shifting outward.

3) Demonstrate that you understand the terminology used in the question.

• When a question asks why it is particularly important for developing nations that the
pattern of trade depends on comparative advantage rather than absolute advantage, work
a quick definition of absolute and comparative advantage into your answer.

4) Demonstrate an understanding of the class material.

• Use the concepts, terminology, and methods presented in class to answer the question. If
you are asked a question about markets, draw a supply and demand diagram to answer
the question and refer specifically to that diagram in your written response.

5) Don’t shortcut your answers.

• When asked to define absolute advantage, don’t say that “Absolute advantage exists
when one country can produce a good more efficiently than another.” That turns out to
be wrong, or at least ambiguous. Instead tack on that last vital word from the definition
you were given. Write out the whole thing. “Absolute advantage exists when one country
can produce a good more efficiently than another country.”

6) Use proper grammar, punctuation, and spelling in your answers.

• The object of the exam is to impress your instructor with your knowledge. Do not make
it harder for him to decipher your meaning with careless misspellings, poor punctuation,
and terrible grammar. The whole purpose of your answer is to communicate your
knowledge clearly. Errors in punctuation, spelling, and grammar get in the way of that
communication and can even change the meaning of what you are trying to say.