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Practice Problems
   

Practice Problems for Quiz 1

1.       Create a Production Possibilities Curve (PPC) based on the following data.  What areas are attainable v. unattainable, efficient v. inefficient?

 Production Possibilities of Strawberries and Pony Rides by Homestead Farms

      Production Alternatives                

Type of Product                                  a          b          c          d          e

Strawberries (in pints)                            1          2          3          4          5

Pony Rides (individual rides)                  10         8          5          3          1

 

 2.       From the data below, draw the Market Demand & Supply curves.  Describe the Market Equilibrium for this product (a).  The Chinese government passes new labor laws, increasing Nike’s production costs.  Reflect this change on your graph (b).  What happens in the market? Label your graph properly.

            Market Supply of and Demand

            for Air Jordan Nike Sneakers

               Total                                                      Total

               Quantity               Price                      Quantity

               Supplied              ($)                          Demanded

               pairs/ day             per pair                 pairs/day  

                15,000                     $150                        2,000

                10,000                     $120                        4,000

                7,000                       $90                          7,000

                4,000                       $60                          15,000

                1,000                       $30                          20,000

3.       Create a Production Possibilities Curve (PPC) based on the following data.  What areas are attainable v. unattainable, efficient v. inefficient?

 Production Possibilities of Mustangs and F150 Trucks by Ford

      Production Alternatives                

Type of Product                                   a          b          c          d          e

Mustangs (hundred thousands)               0          1          2          3          4

F150 Trucks (thousands)                        10         9          7          4          1

 4.       From the data below, draw the Market Demand & Supply curves.  Describe the Market Equilibrium for this product (a).  A new fad diet discourages drinking orange juice due to its high sugar content.  Reflect this change on your graph (b).  What happens in the market? Label your graph properly.

 

Market Supply of and Demand

                              for Orange Juice

           Total                                           Total

          Quantity            Price                Quantity

          Supplied           ($)                     Demanded

         (gallons/day)       per gallon    (gallons/day)    

           12,000                     $5                       2,000

           10,000                     $4                       4,000

           7,000                       $3                       7,000

           4,000                       $2                      11,000

           1,000                       $1                      16,000

5.       Create a Production Possibilities Curve (PPC) based on the following data.  What areas are attainable v. unattainable, efficient v. inefficient?

 Production Possibilities of Big Macs and Filet-O-Fish by McDonald’s

      Production Alternatives                

Type of Product                                   a          b          c          d          e

Big Macs (hundreds)                             0          1          2          3          4

Filet-O-Fish (hundreds)                          6          4          3          1          0

6.       From the data below, draw the Market Demand & Supply curves.  Describe the Market Equilibrium for this product (a).  Prices of hamburgers increases.  Reflect this change on your graph (b).  What happens in the market?      Label your graph properly.

 

Market Supply of and Demand for Hot Dogs

Total                                                      Total

Quantity                                Price                      Quantity

Supplied                                ($)                          Demanded

(dozen/week         per dozen              (dozen/week)    

15,000                     $6                            2,000

10,000                     $5                            3,000

5,000                       $4                            5,000

3,000                       $3                            7,000

1,000                       $2                            10,000

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