CUFEExercise answerWord格式文档下载.docx

CUFEExercise answerWord格式文档下载.docx

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a.Usethesedatatoestimatethepriceelasticityofdemandforsubwayrides.

b.Accordingtoyourestimate,whathappenstotheTransitAuthority’srevenuewhenthefarerises?

c.Whymightyourestimateoftheelasticitybeunreliable?

a.Ifquantitydemandedfallsby4.3%whenpricerisesby20%,thepriceelasticityofdemandis4.3/20=0.215,whichisfairlyinelastic.

b.Becausethedemandisinelastic,theTransitAuthority'

srevenueriseswhenthefarerises.

c.Theelasticityestimatemightbeunreliablebecauseitisonlythefirstmonthafterthefareincrease.Astimegoesby,peoplemayswitchtoothermeansoftransportationinresponsetothepriceincrease.Sotheelasticitymaybelargerinthelongrunthanitisintheshortrun.

2.Thecostofproducingstereosystemshasfallenoverthepastseveraldecades.Let’sconsidersomeimplicationsofthisfact.

a.Drawademand-and-supplydiagramtoshowtheeffectoffallingproductioncostsonthepriceandquantityofstereossold.

b.Inyourdiagram,showwhathappenstoconsumersurplusandproducersurplus.

c.Supposethesupplyofstereosisveryelastic.Whobenefitsmostfromfallingproductioncosts–consumersorproducersofstereos?

a.Theeffectoffallingproductioncostsinthemarketforstereosresultsinashifttotherightinthesupplycurve,asshowninthefigurebelow.Asaresult,theequilibriumpriceofstereosdeclinesandtheequilibriumquantityincreases.

b.ThedeclineinthepriceofstereosincreasesconsumersurplusfromareaAtoA+B+C+D,anincreaseintheamountB+C+D.Priortotheshiftinsupply,producersurpluswasareasB+E（theareaabovethesupplycurveandbelowtheprice）.Aftertheshiftinsupply,producersurplusisareasE+F+G.SoproducersurpluschangesbytheamountF+G–B,whichmaybepositiveornegative.Theincreaseinquantityincreasesproducersurplus,whilethedeclineinthepricereducesproducersurplus.BecauseconsumersurplusrisesbyB+C+DandproducersurplusrisesbyF+G–B,totalsurplusrisesbyC+D+F+G.

c.Ifthesupplyofstereosisveryelastic,thentheshiftofthesupplycurvebenefitsconsumersmost.Totakethemostdramaticcase,supposethesupplycurvewerehorizontal,asshowninFigure12.Thenthereisnoproducersurplusatall.Consumerscaptureallthebenefitsoffallingproductioncosts,withconsumersurplusrisingfromareaAtoareaA+B.

1.Fourroommatesareplanningtospendtheweekendintheirhostelroomwatchingoldmovies,andtheyaredebatinghowmanytowatch.Theirwillingnesstopayforeachmovieis:

Sharon

AiBeng

HuiShin

YeeHui

FirstMovie

$7

$5

$3

$2

SecondMovie

$6

$4

$1

ThirdMovie

$0

FourthMovie

FifthMovie

a.Withinthehostelroom,istheshowingofamovieapublicgood?

Whyorwhynot?

b.Ifitcosts$8torentamovievideo,howmanyvideosshouldtheroommatesrenttomaximizetotalsurplus?

c.Iftheychoosetheoptimalnumberfrompart（b）andthensplitthecostofrentingthevideosequally,howmuchsurplusdoeseachpersonobtainfromwatchingthemovies?

a.Withinthehostelroom,theshowingofamovieisapublicgood.Noneoftheroommatescanbeexcludedfromviewingthemovie.Becauseoneroommate’sviewingdoesnotaffecttheabilityofanotherroommatetoviewthemovie,thegoodisalsonon-rivalinconsumption.

b.Theroommatesshouldrentthreemoviesbecausethevalueofthefourthfilm（$6）wouldbelessthanthecost（$8）.

c.Thetotalcostwouldbe$8×

3=$24.Ifthecostweredividedevenlyamongtheroommates,eachwouldpay$6.Sharonvaluesthreemoviesat$18sohersurpluswouldbe$12.AiBengvaluesthreemoviesat$12sohersurpluswouldbe$6.HuiShinvaluesthreemoviesat$6,sohersurpluswouldbe$0.YeeHuivaluesthreemoviesat$3sohersurplusis-$3.Totalsurplusamongthefourroommateswouldbe$15.

Surplus

$12

-$3

1.HealthyHarry’sJuiceBarhasthefollowingcostschedules:

Q（cups）

1

2

3

4

5

6

VariableCost（$）

10

25

45

70

100

135

TotalCost（$）

30

40

55

75

130

165

a.Calculateaveragevariablecost,averagetotalcostandmarginalcostforeachquantity.

b.Graphallthreecurves.Whatistherelationshipbetweenthemarginalcostcurveandtheaveragetotalcostcurve?

Whatistherelationshipbetweenthemarginalcostcurveandtheaveragevariablecostcurve?

Explain.

a.Thefollowingtableshowsaveragevariablecost（AVC）,averagetotalcost（ATC）,andmarginalcost（MC）foreachquantity.

b.Thefigurebelowshowsthethreecurves.Themarginal-costcurveisbelowtheaverage-totalcostcurvewhenoutputislessthanfourandaveragetotalcostisdeclining.Themarginal-costcurveisabovetheaverage-total-costcurvewhenoutputisabovefourandaveragetotalcostisrising.Themarginal-costcurveliesabovetheaverage-variable-costcurve.

1.WhatcomponentsofGDP（ifany）wouldeachofthefollowingtransactionsaffect?

（a）Yourneighbourbuysanewrefrigerator.

（b）Yourunclebuysanewhouse.

（c）Thegovernmenthiresteacherstoprovidefreeeducationtothepeople.

（d）YourparentsbuyabottleofFrenchwine

（e）ASwitzerlandDrugsCompanysetupalabinSingaporefortestingdrugs

1.a.Consumptionincreasesbecausearefrigeratorisagoodpurchasedbyahousehold.

b.Investmentincreasesbecauseahouseisaninvestmentgood.

c.Governmentpurchasesincreasebecausethegovernmentspentmoneytoprovideagoodtothepublic.

d.Consumptionincreasesbecausethebottleisagoodpurchasedbyahousehold,butnetexportsdecreasebecausethebottlewasimported.

e.Investmentincreasesbecausenewstructuresandequipmentwerebuilt.

2.Belowaresomedatafromaneconomy:

Year

Priceperfootball

Quantityoffootballs

Priceperbaseball

Quantityofbaseballs

2005

$10

200

$8

2006

14

2007

350

125

（a）ComputenominalGDP,realGDP,andtheGDPdeflatorforeachyear,suing2005asthebaseyear.

（b）ComputethepercentagechangeinnominalGDP,realGDP,andtheGDPdeflatorin2006and2007fromtheprecedingyear.Foreachyear,identifythevariablethatdoesnotchange.Explaininwordswhyyouranswermakessense.

（c）Dideconomicwell-beingrisemorein2006or2007?

2.a.CalculatingnominalGDP:

2005:

（$10perfootball´

200footballs）+（$8perbaseball´

75baseballs）=$2,600

2006:

（$14perfootball´

200footballs）+（$10perbaseball´

75baseballs）=$3,550

2007:

350footballs）+（$10perbaseball´

125baseballs）=$6,150

CalculatingrealGDP（baseyear2005）:

2007:

350footballs）+（$8perbaseball´

125baseballs）=$4,500

CalculatingtheGDPdeflator:

（$200/$200）´

100=100

（$3,550/$2,600）´

100=137

（$6,150/$4,500）´

b.CalculatingthepercentagechangeinnominalGDP:

PercentagechangeinnominalGDPin2006=[（$3,550−$2,600）/$2,600]´

100=37%.

Percentagechange