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Get your custom answer from expert tutors on course hero to this homework question:Essay questions-Econ. 203 ( short 1 to 2 paragraphs answers.)1. The Tokyo Bay Aqualine bridge and tunnel cuts travel time by an hour between some points in the Tokyo region and costs Â¥3,000 for the kind of vehicle most Americans in Japan drive. Officials on both sides of the Bay would like the traffic on the bridge to be heavier than it is, but most motorists appear to be taking a much longer route through the heart of Tokyo to avoid the fare. (a)Based on the above information, what can you speculate as to the price elasticity of demand for traffic on the bridge?(b)An economist has estimated that if tolls fell to Â¥2000, traffic would rise from the current 3,000 vehicles to 7,000. What is the price elasticity?(c)What do you recommend the bridge operators should do with regard to fares, assuming that additional traffic cost the operators nothing?(d)If engineers discover that maintenance of the bridge, whether or not cars use the bridge, is 20 percent more than expected than when the fares were initially established, how does that affect your recommendation?2. Compare and contrast THREE of the following pairs (a) The riskiness of bonds versus that of stocks, either to the issuer or to the investor(b)inferior good versus normal goods(c)marginal cost and marginal productivity(d)average variable cost and average fixed cost3. If salmon runs this year in some places this year were unusually good and just normal in other places, how does this affect profitability of fishermen and firms in the places where runs were normal? If this yearâs pattern becomes the norm, how will such fishermenâs profits change over the next few years? Use the supply and demand curves below to identify (a) the industry and firm position before the selectively improved runs (b)immediately after and (c)after a few years during which the improved runs continue in some parts of the world. Assume that the initial industry demand situation is shown by curve 4, with the equilibrium being point D. Prices as indicated by the letters A to D are the same in the two charts. The AC curve in the second chart is average total cost*I4. Canadaâs oil tar sands contain large amounts of oil, but is difficult to extract. In fact, when oil was $20 a barrel, there was little activity there. Assuming no improvement in technology (in this respect this question differs from the review question on the same subject), show how $80 a barrel has led to increased activity in the tar sands. Describe in words how the diagram shows the impact o fan increase in world demand on price and the resultant production of oil from the tar sands. The initial supply and demand curves are shown in red and the possibilities after the change are lines AD, BC, CD and AB*5. Here are some numbers: Output Marginal cost Variable cost Average fixed cost Price per unit1 20 ? 300 502 49 ? 150 503 49.5 ? 100 504 80 ? 75 50(a) What kind of firm is this?(b) What level of output should it produce? Explain6. Describe how a monopoly goes about establishing a price and quantity to produce. Multiple choice question1. Opportunity cost refers to(a) the value of what is gained when a choice is made(b)difference between the value of what is gained and what is forgone when a choice is made(c) value of what is forgone when a choice is made(d)direct costs involved in making a choice2. Trade based on comparative advantage is consistent with all of the following except(a) one country is better at producing everything than another(b) countries export goods in which they are less efficient in producing than the importing country(c)countries can increase national income and welfare by restricting the importation of goods which the country can produce more efficiently than others(d)comparative advantage is consistent with all these practices3. Which is an example of an undesirable side effect of he operation of the market mechanism?(a) negative externalities(b) comparative advantages(c) abstractions(d) productivity growth4. A& P Supermarkets grew in the 1930s and 1940s because the CEO correctly believed that sales volume--and profits-- would be much higher if the stores lowered prices. The strategy worked because(a) the supply elasticity was high(b) the demand elasticity was high(c) the supply elasticity was low(d) profits were highly elastic5. As a consequence of worldwide shortages, China has from time to time imposed price controls on some essential commodities. One might predict in China(a) a large increase in the availability of these items, ending shortages(b) a severe shortage of these essential commodities(c) an increase in the price of these items, thus alleviating shortages(d)new efforts to increase production of these commodities6. India, by contrast, has severely limited rice exports for the same reason. The effect of this action will be(a) to raise farm incomes in India(b)to take advantage of comparative advantage(c)to raise rice prices outside India(d)to lower marginal cost7. If vegetarianism becomes more popular, we might expect(a)the price of beef to rise as operators strive to cover costs with a smaller quantity sold(b)a drop in the price of beef as vegetarians cause a leftward shift in demand(c)a shift in the supply curve for beef to counteract changing demand(d)both (a) and (c) are true8. An economist investigates the demand for the products of your firm, JIA stone building materials, and finds that the price elasticity equals 1.3. On the basis of this finding, you --if you can control price-- should(a)Lower price to increase volume and increase revenue(b)Raise price, hoping to increase revenue(c)Keep price constant(d)Not enough information is given to answer9. If, as Malthus, an eighteenth century economist believed, the marginal productivity of farm workers declines as the number of workers increase and their average food consumption per person remains constant then (a)fewer workers could produce more food(b)famine is inevitable sooner or later(c)humankind will always have enough food(d)an increase in the number of farm workers implies lower food production10. If we observe that fresh pasta is available in grocery stores located in wealthy neighborhoods, but not in stores of the same chain located in poor neighborhoods, we can conclude that the chain believes(a)the demand for fresh pasta is highly elastic(b)fresh pasta has a high income elasticity(c)the supply of fresh pasta is inelastic(d)fresh pasta is an inferior good11. If Suzuki Baseball Bat Co. has higher fixed costs than Tanaka Baseball Bat Co., but all their other costs and revenues are identical,(a) Suzuki will make more baseball bats than Tanaka(b)Tanaka will make more baseball bats than Suzuki(c)They will make the same number of baseball bats(d)We cannot tell from the information given12. Consumer surplus refers to(a)the amount of extra money extracted from consumers by firms that raise prices(b)the marginal physical product of the last unit produced(c)what consumers have left over after buying a product(d) the dollar value of benefits to the consumer above what (s)he has to pay for them13. A news item included claims that sunblocks are not nearly as effective as claimed. One expert suggested, in an opinion that is likely to be unpopular in some quarters, that people wear more clothes instead. Based on this logic we conclude that(a)sunblock and clothing are complements(b)clothing and sunblock have a high cross elasticity of demand(c)a shift in the demand curve for sunblock will cause a shift in the supply curve of clothes(d)all of the above14. Smith Co. has average fixed costs of $172.50 when it is making two units. It has marginal costs of $15 for the first unit, $15 for the second unit and $10 for the third unit. What is its average total cost for three units?(a)$40(b)$195(c)$212.50(d)$13015. Smith Co. finds that its revenues for one unit sold equal $40, for two units, $80 and for three units, $120. Its marginal revenue (a)equals $40(b)varies between $40 and $120(c)equals $240(d) None of the above 16. If a perfectly competitive firm is making economic profits, we an conclude(a)something is incorrectly measured because such firms donâ t make profits(b)it is in long-term equilibrium(c)it is in short-term equilibrium (d)it is not in equilibrium17. Monopolies differ from perfectly competitive firms because(a)Monopolies can always increase profits by raising prices(b)Marginal revenue for monopolies is positive(c)Monopolies face a downward sloping demand curve(d)Monopolies are always profitable18. In which situation is marginal utility of water probably the highest?(a)In a wet climate where water is used extensively in wet-field rice fields, for example(b)In the Australian desert(c)In areas that have recently been flooded(d)in rich countries(e)None of the above19. The division of labor means that(a)Marginal productivity is negative(b)Productivity is higher when workers specialize(c)Bigger operations are more efficient than small ones(d)None of the above20. If Americans like rice well enough, but would rather not have it more than once a day, while Japanese are fine with having it more than once a day, we might conclude that(a)Marginal utility of rice for Americans is negative(b)Marginal utility for rice declines more for Americans than for Japanese(c)Japanese like rice more than Americans do(d)Rice is more expensive in Japan than in the United States