V1 V1
1. Wharf space is scarce in Newport harbor. Pleasure boats and fishing boats vie for the limited wharf space which totals 7,500 linear feet. The average pleasure boat (p) is 50 feet long, while the average fishing boat is 75 feet long. Which of the following possibility curves best represents the situation?
2. What happened to Thailand and their currency the bhat in 1997 that prompted it to "drop like a rock"? One of the causes of the decline in the bhat's value was the decision on the part of foreign investors to withdraw their money from the Thailand stock market. If we looked at the market for bhats, how would we demonstrate this effect?
3. In 1999 the Russian currency's value fell as world investors began to get nervous about the loans they had made to Russia. One of the "solutions' to the crisis has been the raising of interest rates in Russia. This can have two very distinct effects on the market for the ruble. One effect will be the slowing down of the Russian economy that will translate into lower Russian demand for imports. How would you show this in the supply-demand model for the ruble?
4. In 1999 the Russian currency's value fell as world investors began to get nervous about the loans they had made to Russia. One of the "solutions' to the crisis has been the raising of interest rates in Russia. This can have two very distinct effects on the market for the ruble. One effect will be to increase the inflow of investment funds to Russia as investors around the world begin to see the high interest rates as sufficient to compensate for the risk. How would you show this in the supply-demand model for the ruble?
5. What's a semester at school cost you? What would happen to the cost of a year at URI for a student with a car if he/she could get a reduced rate on their car insurance because of full-time student status. This feature of the car insurance plan will:
6. Helio plastics is a company that we looked at in class as an example of production possibility curves. A review of the "books" of Helio reveals that the company has projected revenues of $1,500,000 this year and projected costs of $1,250,000. Bob Grates, looking for a way into the plastics industry, has made an offer of $750,000 to buy Helio. Based on your knowledge of economics, what would the economic profit of Helio's continued operation be in the situation where the sale was refused?
7. Stagflation id defined as a period of rising unemployment and rising inflation. Based on the diagram above, when did the US economy enter a period of stagflation? [The year on the horizontal axis marks the beginning of the year.]
8. What's going to happen to the price of champagne for those looking to celebrate the passing of the millennium? Suppliers who have anticipated the expected increase in demand, have expanded production. If the additional supply finds its way to the market and the extra demand is realized, then you can "bet":
Use the following graphs to answer the next 2 questions.
9. The price of gas has risen rather dramatically in recent months, even though the prices of many commodities have fallen. Between January and August, the price of unleaded gasoline has increased approximately 25%, an increase that has been attributed to the booming US economy. Which graph best depicts the situation in the gas market?
10. The WSJ reported that hurricane Floyd rekindled a heated debate between insurance companies and building contractors. The insurance companies want the builders to install costly equipment, such as storm shutters, that would reduce the damage done by the hurricanes. The builders do not want to be forced to provide the extra equipment since it will add to the costs of construction. The increase in construction costs on the market for housing could best be demonstrated by which graph?
Use the following graphs to answer the next 2 questions.
11. 1999 has not been a good time for grain farmers in the US. Good weather has brought about good grain harvests at the same time that the Asian economic crisis has reduced foreign demand for US grain. Which graph best depicts the situation in the grain market?
12. The stock market has been BOOMING in the 1990s, but some see an ominous long-term problem. The problem is the retirement of the baby boomers. When this happens the baby boomers will no longer be bringing in paychecks that will allow them to save plus they will need to cash in some of their stock to pay for their living expenses. These effects on the stock market would be best demonstrated by:
13. Let's assume that you have some extra money and that you are looking for a very safe place to park it. One of the favorite parking spots is US government debt. What is the rate of return that you can expect if you are going to park your money in ten year US government bonds?
14. Where would you like to have invested your money in the past year? If we assume that you invested your money in the stock market, which country would have given you the best rate of return for the year?
15. Where would you like to have invested your money in the past year? If we assume that you invested your money in the New York Stock market, which division would have given you the best rate of return for the year?
16. How much will the Korean VCR cost you to see your favorite movie if you bought it today? If the VCR cost 240,000 South Korean won, what would it cost in US dollars ($).
17. How many shares of Intel stock, that is traded on NASDAQ, could you buy if you wanted to invest $10,000?
Use the following graphs to answer the next three questions.
18. The tobacco industry has been under attack for a number of years for the health risks of smoking. If you are to believe the anti-smoking people, which of the diagrams would be the expected result of a survey of the number of cigarettes consumed (x) and the likelihood of lung cancer (y).
19. One of the things you will find is that people will always offer you a free good. One example of this would be the ads that promise the highest return with the least risk. Which of the following demonstrates the situation in the stock market where you find that the expected gain from a stock (y) tends to be higher when the risk (x) is lower?
You have all undoubtedly experienced some problems getting into your courses. The choice situation facing the chair of a department who must supply seats for upper level classes (Y) and lower level classes (X) can be represented by a possibility curve. Use the diagram below to answer the following two questions. [The dashed line represents the new possibility curve].
20. Which diagram describes the situation if the department has a retirement of a faculty member?
21. Which diagram describes the decision on the part of the chair to increase the class size for upper level courses?
22. The countries of Avelonia and Babylini both produce cloth and wine. In Avelonia, one worker can produce six yards of cloth or four bottles of wine in an hour. In Babylini one worker can produce eight yards of cloth in one hour or twelve bottles of wine. If these two countries could begin to trade and trade would be in the direction expected based on the theory of comparative advantage, what would you expect the trade pattern to be?
23. Which of the following would be a headline about a microeconomic story?
24. The relationship between interest rates and unemployment has been studied in both the US and Germany. What researchers found is that inflation and unemployment rates are negatively related in both countries - as the unemployment rate rises, the inflation rate falls. The only difference between the two countries is that in the US, the inflation rate is more responsive to changes in unemployment - any change in unemployment leads to a larger change in change in inflation in the US. [the graphs are labeled a-d running from left to right]
25. Oprah Winfrey has established a significant presence on TV with her daytime show. One of the features of her show is the book book where she promotes a book to her viewers. This promotional effort by Oprah would show up in the market for the promoted book as:
26. The Palm Pilot is the most successful handheld computer on the market at the present time and, at least by some accounts, has had very few competitors. This changed in September with the introduction of the Handspring Visor created by two of the "brains" behind the Palm Pilot. The introduction of the handspring Visor would have what impact on the market for the Palm Pilot?
27. McDonald's has launched a program based on a complete reengineering of its cooking system. The new cooking system has been designed as a way of upgrading the product to allow McDonald's to compete more successfully with new rivals. If the launch is successful, you could expect to see_____ in the market for McDonald's burgers.
28. A debate has been taking place over what to do with the expected federal government budget surplus. Some are looking at this as an opportunity to finally fund some of the programs that have been cut back in recent years as part of budget balancing efforts. Those who support this position would be most likely to be classified as:
29. The Wall Street Journal reported a decrease in the unemployment rate so that by Fall 1999 it was at rates not seen since the 1960s. This has meant that many of the middle managers who had lost their jobs had found employment in the expanding US economy. What is the likely impact of this reduction in the unemployment rate on the cost of an MBA degree for someone that has been recently rehired?
30. Social security is an issue that will be with us for many years. President Clinton has proposed that the US government invest hundreds of billions of dollars in the stock market to bolster social security. If Clinton is successful at achieving his goal, what would be the best representation of the impact of this policy on the market for US stocks?
31. The stock market has been BOOMING in the 1990s. Some suggest that this is because the baby boomers are in their 40's and 50s so they now have money to invest in the stock market. This effect on the stock market would be best demonstrated by:
32. Malaysia defied the traditional economic thinking on capital markets and it generated a good deal of press coverage. In a recent article the Malaysian decision to intervene in the operation of the capital market was roundly criticized. This is what you would expect to hear from a:
33. The Cold War dominated the world scene for most of the post WW II era. It was a time where communism and capitalism vied for world dominance - often times in the backyards of people in Asia, Africa, and Eastern Europe. Who provided the theoretical basis for the communist claim that they had the high ground and that the capitalist system would eventually collapse under its own weight?