Elementary Macroeconomics ECON 2100 Problem set #1 Due date: Saturday-Oct l, 11.59pm Instructor: Meltem Topaloglu Onen Email address: mtopalogluonen@gradcenter.cunyedu Question 1 Consider the following cases. Clarify the situation and explain which of the \"Ten Principles\" they are mostly talking about and why? (In these cases you should think about more than one principle) 0 Chris has a nal exam tomorrow. He still needs to focus on the nal chapters of the book to get the full grade in order to be ranked rst in the class. On the other hand, he has been invited to his intimate friend's goodbye party which is tonight. 0 Chris has a Toyota Camry, the engine of which needs to be repaired. He has to spend 1500$ to repair it. On the other hand, the repairman offers him that he likes Chris's broken car and wants to pay 4000$ to buy it in this condition. However, Chris can sell the repaired car at the price of 5400$ in a well-organized market through a confidential broker company which assures him that his check will be cashed immediately. Question 2 An economy consists of three workers: Larry, Moe, and Curly. Each works 10 hours a day and can produce two services: mowing lawns and washing cars. In an hour, Larry can either mow one lawn or wash one car; Moe can either mow one lawn or wash two cars; and Curly can either mow two lawns 0r wash one car a. Calculate how much of each service is produced under the following circumstances, which we label A, B, C, and D: All three spend all their time mowing lawns. (A) 0 All three spend all their time washing cars. (B) ' All three spend half their time on each activity. (C) Larry spends half his time on each activity, while Moe only washes cars and Curly only mows lawns. (D) b. Graph the production possibilities frontier for this economy. Using your answers to part 6:, identify points A, B, C, and D on your graph. 0. Explain why the production possibilities frontier has the shape it does. d. Are any of the allocations calculated in part \"a \" inefcient? Explain. e. Explain about the slope of this diagram and if it is possible calculate the slope at least in one (or more) points. Question 3 England and Scotland both produce scones and sweaters. Suppose that an English worker can produce 50 scones per hour or 1 sweater per hour. Suppose that a Scottish worker can produce 40 scones per hour or 2 sweaters per hour. a. Which country has the absolute advantage in the production of each good? Which country has the comparative advantage? b. If England and Scotland decide to trade, which commodity will Scotland export to England? Explain. c. If a Scottish worker could produce only 1 sweater per hour, would Scotland still gain from trade? Would England still gain from trade? Explain. Question 4 Find the market supply and market demand for each tables. Draw the individual curves and the aggregate curves (market demand and market supply curves) as well. Table J-Demandfor ice cream Price per scope(USD) Anne's Demand (per Ben's Demand (per scope) scope) Question 5 Consider the markets for lm streaming services, TV screens, and tickets at movie theaters. a. For each pair, identify whether they are complements or substitutes: 0 Film streaming and TV screens 0 Film streaming and movie tickets - TV screens and movie tickets b. Suppose a technological advance reduces the cost of manufacturing TV screens. Draw a diagram to show what happens in the market for TV screens. 0. Draw two more diagrams to show how the change in the market for TV screens affects the markets for lm streaming and movie tickets. Question 6 Using supply-anddemand diagrams, show the effects of the following events on the market for sweatshirts. a. A hurricane in South Carolina damages the cotton crop. b. The price of leather jackets falls. c. All colleges require morning exercise in appropriate attire. d. New knitting machines are invented