The worksheet of the first page

1. Basic Concepts (10 points): Give an example for each of the following: a. A positive statement related to microeconomics economics. b. A normative statement related to macroeconomics economics. c. An application of ceteris paribus. d. A solution to the Allocation Problem in a Traditional System. e. A solution to the Distribution Problem in an Authoritarian System. 2. Supply and Demand (8 points): Concerned buyers purchase more face masks than usual due to concerns about SARS-CoV-2. However, sellers are unable to immediately respond to this "economic shock." Answer the following questions about this market, assuming that it was at equilibrium before the pandemic. a. What variable ("determinant") might have changed and why? How does that effect the Demand curve graphically? b. Why are sellers unable to immediately change their production? How does that effect the Supply curve graphically? c. What might be preventing sellers from adjusting the price? What is the overall result from this lack of adjustment? d. What is the effect on combined consumer surplus and producer surplus? 3. Public Choice Theory (5 points): What is the main point of Kenneth Arrow's "Impossibility Theorem"? How does it relate to our discussion in class? 4. Utility Maximization (2 points): Refer to the table below: Write the algebraic expression reflecting consumer equilibrium at the consumption of the 2nd $2 taco and the 1st $1 cup of Diet Coke. Tacos Consumed per Total Utility (utils) Marginal Utility (utils) Marginal Utility per mea dollar spent 1 10 10 5 2 18 8 4 3 24 6 3 4 28 4 2 5 30 2 1 6 30 0 0 7 28 -2 -1