Economics Problems Set 1

1353 Words Sep 10th, 2015 6 Pages
MBA-FP6008: Assessment 1, Economics Problem Set 1
Dennis J. Johnson
Capella University
08/12/2015

Problems A, B, and C

Introduction

This assessment will be an analysis of graphed data and changes in supply and demand for three economic problems. Problem A involves production possibilities for consumer and capital goods, problem B is an evaluation of changes in supply and demand equilibrium, and finally, problem C involves pricing with relevance to supply and demand. Successful completion of this assessment demonstrates proficiency in; applying theories, models, and practices of economic theory, analyzing solutions with support from relevant data, resources, references, and economic principles, analyzing graphed and circular flow
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3. If hypothetically the economy were producing only1 butter and 10 guns, it could be concludes increasing opportunity cost, because when the graph moves from A to E, it must give up larger amounts of butter to acquire equal amounts of guns. This is shown through the slope of the production possibilities curve, which gets steeper as we move from A to E (McConnell, Brue, Flynn, 2015) 4. Production outside the production possibility curve would currently be unattainable. The production that is attainable is inside of, on the shape of, or on the line of the curve. Technological changes such as production methods, could allow for attainability of production outside of the curve, as technological advancements may allow production of more guns and butter. International trade permit consumption also allows for production beyond the possibilities curve, in that the country being traded to may specialize in guns and butter. We could trade something that we produce at a very low opportunity cost, therefore making production of guns and butter cost less. (McConnell, Brue, Flynn 2015)

Problem B.
Evaluate each of the following changes in supply and/or demand. How will each affect equilibrium price and quantity in a competitive market? Will price and quantity rise, fall, or be unchanged? Based on shifts, will the answers be indeterminate? 1. Supply decreases and…

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