NAME ID: II. This question is loosely inspired by the Hans Roesling's video "The magic washing machine," seen in class. Roesling. who was born in 1948 and Swedish, recalled the childhood moment when his family first installed a mechanical washing machine at home. Imagine a woman called Maria, who like Roesling's grandmother, had 7 children and (to make the example simple) has only L - 10 hours a day to dedicate to "washing laundry" and/or to "reading books" to herself and her children. First, without a washing machine the household technology is as follows. Maria's productivity is MPLw = 1/2 wash load per hour. MPLy = 1/2 book per hour (c.g. stories read to kids). Read carefully, filling in the blanks in the rectangles below (enter only numbers) and drawing as indicated: + If Maria dedicates all L-10 hours to washing, she could complete a maximum of wash loads in the day. + If Maria dedicates all L-10 hours to reading, she could read a maximum of books in the day. + Draw the production possibility frontier (PPF) for Maria's household on the grid below. + Suppose Maria had to wash 4 loads a day for the minimum functioning of the household. Then Maria would have to dedicate hours to washing which would leave her hours to read books. allowing her to read only book(s) a day. + Clearly indicate this wash load and book reading output combination point on the PPF and label it as point A. + Suppose Maria's household gets a washing machine that doubles her washing productivity to MPLy = 1 loads per hour. Draw the new PPE associated with this improved technology on the same diagram below. + With the new technology Mary can now wash the minimum safe quantity of 4 loads a day with hours of labor, which leaves her time to now read books. Indicate this new output combination and label it B. Wash 7 loads 9 10 11 12 13 14 15 Books read 6 of 6Economics 100-A Modo omron Spring 2023 Professor Jonathan Conning FIRST MIDTERM EXAM omic efficiency implies that Instructions: Please use a pencil to legibly write your name and student ID resources are distributed in a fair ma on the provided bubble sheet and on both sides of the separately provided all material wants are satisfied. graph questions sheet. Please mark your answers dark enough since all expense. to one can be marte better off. even answers must be readable by a scanner. Good Luck. d. we are using the latest and most modern tech ology. Please bubble option A where it asks for the exam VERSION (to the Consider the strategic game below, involving right of where you entered your name on the bubble sheet). Each player can choose a strategy to plant Kice or to stand Car is Bala's best response to Anil's choice of 'Canavan Please bubble ' A' as the answer to question 1. Which of the following statements about scarcity is the most correct? Rice Scarcity is not a problem for wealthy families. Cassava There is no scarcity of clean air. he has no clear best response in this case. Public libraries and many highways are free so they are not scarce. he is indifferent between the two, Scarcity forces people to make choices. so he flips a coin to decide. Opportunity costs measure costs in terms of the value of what is sacrificed. refers only to the non-monetary costs of making a decision ignore alternatives. f the above game were played as a simultaneous move game, what would be the predicted "equilibrium in dominant strategies" Anil and Bala would are relevant for persons, but not for money-focused businesses. respectively play A production possibility frontier depicts the tradeoff between Rice, Rice d s demand and supply. Cassava, Cassava Rice, Cassava price and quantity. Cassava, Rice. one output and another output. equity and efficiency. 10 Continuing with the same question. We would label this type of game: An ultimatum game did On the vertical axis of a production possibility frontier graph, we find the A Prisoner's Dilemma price of a good. An invisible hand game price of a substitute good. A coordination game the quantity of one good. 11. Which of the following statements is False? gross national product. In a Nash equilibrium, no player has an incentive to deviate a. In a Nash Equilibrium each player is choosing a best response. A production possibility frontier shows combinations of inputs that can produce a specific quantity of output. Every equilibrium in dominant strategies is a Nash equilibrium Every Nash equilibrium is an equilibrium in dominant strategies. combinations of outputs that people exchange with others. combinations of prices and quantities that clear the market. combinations of outputs that can be achieved in a given time period given available resources and current technology. 1 of 6Suppose that severe that unexpected shipping problems produce a decrease in the supply of gasoline to the market over the summer months. Suppose You can use the ares below as scratch for your work. We sits to hey singers that at the same time a successful "conserve gas" advertising campaign the two graph questions on a separate sheet. leads to a reduction in the demand for gasoline in the USA, Supply and demand analysis reveals that in When you are done with the scam please return (1) your wake sheet. the price and the quantity of gasoline sold will both fall for sure. (2) the graph questions (name on both sides), and () these sam quoises to the quantity of gasoline sold will fall, but the direction of price name necessary) movement cannot be known for sure without more information. the price of gasoline will rise, although we cannot know what will happen to quantity without more information. The quantity of gasoline sold will surely rise. 13, Economists typically draw supply curves sloping upwards to reflect the law of demand the assumption that the marginal cost of producing additional goods rises with output the fact that prices are rising in the economy due to generalized inflation the fact that firms can get away with charging monopoly prices when they sell more The so-called 'paradox of diamonds and water,' that a good so essential to life such as water is priced at a much lower price by the market compared to luxuries such as diamonds is resolved once we realize that Humans can in fact survive up to 20 days without water, Market prices tell us the value of a good at the margin. The last bit of water is priced low because water is relatively easy to supply. People value diamonds more than a glass of water because you can always trade a diamond for lots of water. d. Diamond suppliers advertise while water suppliers do not. 35, Consumer surplus is defined as The area below the demand curve The area below the demand curve above the market price The area below the demand curve above the supply curve The area above the supply curve below the price23. Consider the following production possibility frontier with good X on the horizontal and 27. good Y on the vertical. What is the The height of the demand curve at any given quantity tells us the marginal cost of producing one more unit of the good opportunity cost of producing one more unit the willingness to pay of the last consumer just willing to buy the of X. measured in terms of units of good Y? I units of Y per unit of X pressure on the price to fall. 2 units of Y per unit of X sellers of the good to build up unsold inventory. 4 units of Y per unit of X 28. In the diagram at right, at what price 8 units of Y per unit of X will 3 units of output be supplied? 24. a. $1 (refer to PPF above) Suppose that technological improvements now double the productivity of labor in the X N sector. We would expect the (opportunity) cost of producing good X to rise 29 Using the same diagram, at what fall price will producer surplus equal $2 stay the same in the diagram? (hint: area of a 25. triangle) The following game has two Nash a. $1 equilibria in pure strategies if played as a flattina b. $2 simultaneous move game. But suppose C. $3 that it was played as a sequential move in game, with Astrid choosing a strategy first and then Bettina following with her 30. When a country opens to international trade, it is most likely that best response. What would be the everyone in the country will be a winner. expected equilibrium of this game? everyone in the country will be a loser. C++ , C+ + there will be winners and losers. Java, C++ the country is no better off than before it begins to trade. C++, Java 31. The 'law of demand' is not a law, it's just the observation that (almost Java, Java always): quantity demanded rises as the price rises. 26. Orange and apple juice are substitutes in consumption. If the price of quantity demanded rises as the price falls. orange juice goes up the most likely immediate effect on the market for quality rises with price. apple juice would be: quality falls with price. a. An increase (shift out) in the demand for apple juice. An increase (shift out) in the supply of apple juice A fall in the price of apple juice Nothing would happen in the market for apple juice. 3 of 6