AB224 Unit 4 Assignment Template:

Name: -

Course Number: -

Section Number: -

Unit Number: - 4

Date: -

---------------------------------- General Instructions for all Assignments-----------------------------------

1. Unless specified differently by your course instructor, save this assignment template to your computer with the following file naming format:

Course number_section number_LAST_FIRST_ unit number

2. At the top of the template, insert the appropriate information: Your Name, Course Number, Section Number and Date

3. Insert your answers below, or in the appropriate space provided for in the question. Your answers should follow the APA format with citations to your sources and, at the bottom of your last page, a list of references. Your answers should also be in Standard English with correct spelling, punctuation, grammar, and style (double spaced, in Times New Roman, 12-point, black font). Respond to questions in a thorough manner, providing specific examples of concepts, topics, definitions, and other elements asked for in the questions.

4. Provide a list of references at the end of the last page of your assignment.

5. Upload the completed assignment to the appropriate dropbox.

6. Any questions about the assignment, or format questions, should be directed to your course instructor.

------------------------------------------- Career Competencies -----------------------------------------

In this assignment, you will engage in developing the following career competencies:

Analyzing Quantitative Data

Analyzing Qualitative Data

------------------------------------------- Assignment -------------------------------------------

1. For each of the following situations, decide whether the bundle Lakshani is considering optimal or not. If it is not optimal, how could Lakshani improve her overall level of utility? That is, determine which good she should spend more on and which good should she spend less on.

a. Lakshani has $200 to spend on sneakers and sweaters. Sneakers cost $50 per pair, and sweaters cost $20 each. She is thinking about buying 2 pairs of sneakers and 5 sweaters. She tells her friend that the additional utility she would get from the second pair of sneakers is the same as the additional utility she would get from the fifth sweater.

b. Lakshani has $5 to spend on pens and pencils. Each pen costs $0.50 and each pencil costs $0.10. She is thinking about buying 6 pens and 20 pencils. The last pen would add five times as much to her total utility as the last pencil.

c. Lakshani has $50 per season to spend on tickets to football games and tickets to soccer games. Each football ticket costs $10 and each soccer ticket costs $5. She is thinking about buying 3 football tickets and 2 soccer tickets. Her marginal utility from the third football ticket is twice as much as her marginal utility from the second soccer ticket.

2. In the United States, 2007 was a bad year for growing wheat. And as wheat supply decreased, the price of wheat rose dramatically, leading to a lower quantity demanded (a movement along the demand curve). The accompanying table describes what happened to prices and the quantity of wheat demanded.

	2006	2007
Quantity demand (bushels)	2.2 billion	2.0 billion
Average price (per bushel)	$3.42	$4.26

a. Using the midpoint method, calculate the price elasticity of demand for winter wheat.

b. What is the total revenue for U.S. wheat farmers in 2006 and 2007?

c. Did the bad harvest increase or decrease the total revenue of U.S. wheat farmers? How could you have predicted this from your answer to part a?

3. A recent study determined the following elasticities for Volkswagen Beetles:

Price elasticity of demand = 2

Income elasticity of demand = 1.5

The supply of Beetles is elastic. Based on this information, are the following statements true or false? Explain your reasoning.

a. A 10% increase in the price of a Beetle will reduce the quantity demanded by 20%.

b. An increase in consumer income will increase the price and quantity of Beetles sold. Since price elasticity of demand is greater than 1, total revenue will go down.

--------------------------------------------

References:

AB224 Unit 4 Assignment Template: Name: Course Number: Section Number: Unit Number: Date: -4 - ---------------------------------- General Instructions for all Assignments----------------------------------- 1. Unless specified differently by your course instructor, save this assignment template to your computer with the following file naming format: Course number_section number_LAST_FIRST_ unit number 2. At the top of the template, insert the appropriate information: Your Name, Course Number, Section Number and Date 3. Insert your answers below, or in the appropriate space provided for in the question. Your answers should follow the APA format with citations to your sources and, at the bottom of your last page, a list of references. Your answers should also be in Standard English with correct spelling, punctuation, grammar, and style (double spaced, in Times New Roman, 12-point, black font). Respond to questions in a thorough manner, providing specific examples of concepts, topics, definitions, and other elements asked for in the questions. 4. Provide a list of references at the end of the last page of your assignment. 5. Upload the completed assignment to the appropriate dropbox. 6. Any questions about the assignment, or format questions, should be directed to your course instructor. ------------------------------------------- Career Competencies ----------------------------------------In this assignment, you will engage in developing the following career competencies: Analyzing Quantitative Data Analyzing Qualitative Data ------------------------------------------- Assignment ------------------------------------------- 1. For each of the following situations, decide whether the bundle Lakshani is considering optimal or not. If it is not optimal, how could Lakshani improve her overall level of utility? That is, determine which good she should spend more on and which good should she spend less on. a. Lakshani has $200 to spend on sneakers and sweaters. Sneakers cost $50 per pair, and sweaters cost $20 each. She is thinking about buying 2 pairs of sneakers and 5 sweaters. She tells her friend that the additional utility she would get from the second pair of sneakers is the same as the additional utility she would get from the fifth sweater. Page 1 of 3 b. Lakshani has $5 to spend on pens and pencils. Each pen costs $0.50 and each pencil costs $0.10. She is thinking about buying 6 pens and 20 pencils. The last pen would add five times as much to her total utility as the last pencil. c. Lakshani has $50 per season to spend on tickets to football games and tickets to soccer games. Each football ticket costs $10 and each soccer ticket costs $5. She is thinking about buying 3 football tickets and 2 soccer tickets. Her marginal utility from the third football ticket is twice as much as her marginal utility from the second soccer ticket. 2. In the United States, 2007 was a bad year for growing wheat. And as wheat supply decreased, the price of wheat rose dramatically, leading to a lower quantity demanded (a movement along the demand curve). The accompanying table describes what happened to prices and the quantity of wheat demanded. Quantity demand (bushels) Average price (per bushel) 2006 2.2 billion $3.42 2007 2.0 billion $4.26 a. Using the midpoint method, calculate the price elasticity of demand for winter wheat. b. What is the total revenue for U.S. wheat farmers in 2006 and 2007? c. Did the bad harvest increase or decrease the total revenue of U.S. wheat farmers? How could you have predicted this from your answer to part a? 3. A recent study determined the following elasticities for Volkswagen Beetles: Price elasticity of demand = 2 Income elasticity of demand = 1.5 The supply of Beetles is elastic. Based on this information, are the following statements true or false? Explain your reasoning. a. A 10% increase in the price of a Beetle will reduce the quantity demanded by 20%. Page 2 of 3 b. An increase in consumer income will increase the price and quantity of Beetles sold. Since price elasticity of demand is greater than 1, total revenue will go down. -------------------------------------------References: Unit _4_ Practice Assignment Grading Rubric Percent Possible Content Full assignment 100% Overall Writing: 20% Points Possible 40 8 correct coversheet information at the top of 1st page 5% 2 APA format for answers 3% 1 correct citations 3% 1 standard English no errors 4% 2 At least ONE, or more, references 5% 2 Answers: provides complete information demonstrating analysis and critical thinking: 80% 32 Individual Questions: 1. a. - Is it the best choice or should buy more of which good and less of which good (Sneakers/Sweaters)? 7% 3 1. b. - Is it the best choice or should buy more of which good and less of which good (pens/pencils)? 6% 2 1. c. - Is it the best choice or should buy more of which good and less of which good (football/soccer tickets)? 7% 3 2. a. - What is price elasticity of demand for wheat? 10% 4 2. b. - What is total revenue for wheat? 10% 4 2. c. - Could change in revenue been predicted from elasticity? How? 15% 6 3. a. - Supply of beetles is elastic. (true/false) Why? 10% 4 3.b. - Will total revenue increase, or decrease?? 15% 6 Page 3 of 3