Chapter 1and 2
Q1. Why is the study of economics an important part of social science? Give an example from the real world.
Q2. If the real wage rate (adjusted for inflation) declines for jobs for high school graduates, would the true opportunity cost of attending college or spending for higher education decline? Give an example.
Q3. How do you measure the efficiency of resource allocation? Give an example from a real-world application of measuring the efficiency of resource allocation
Q5. Define and describe the concept of opportunity cost with an example. What would be your opportunity cost for taking online classes to get a degree at the University of Massachusetts Boston (UMB) compared to taking traditional face-to-face classes at UMB or elsewhere? Provide examples in your answers.
Q6. Draw a supply-demand diagram of the market for rental apartments in Boston in the neighborhoods surrounding UMB. Illustrate the effect on monthly rents because of increased public funding from the State of Massachusetts and a simultaneous increase in enrollment capacity for freshman year admission by the university with no increase in tuition and fees. Explain your hypothetically drawn diagram in your own words.
Q7. Suppose the geopolitical tension in the Arab states in the Middle East and Persian Gulf region has severely disrupted oil exports to the United States. Illustrate and explain in your own words the effect on the price of natural gas and the quantity demanded equal to the quantity supplied in the US market because of this decline in the supply of petroleum (fossil fuel) from the Middle East and the Persian Gulf. Hint: please assume that petroleum and natural gas are substitutes.
Q8. Suppose the government passed a new legislation for stricter safety and fuel efficiency conditions on the manufacture of new automobiles. Draw a demand and supply diagram and then illustrate and briefly explain the effect of such legislation on the equilibrium price and the quantity of newly manufactured vehicles vis-à-vis the market for used vehicles (draw two different diagrams for new and used vehicles).
Q9. Suppose the ticket prices for next year’s Super Bowl were announced a year ahead at a range from $1,000 to $25,000, with rates in between for all categories of seats for the stadium. Without any prior information regarding what teams will play, briefly explain why these price ranges do not reflect the true market price of Super Bowl tickets. Do you expect to see the actual market prices much higher, lower, or exactly the same? Why?
Q10. Ed Sheeran, a British pop and rock singer, was scheduled to perform a concert on September 14, 2018, at 7 p.m. at Gillette Stadium in Foxboro, Massachusetts. The ticket price ranges are from $62 to $8,668. Based on your knowledge of the D and S model for the music entertainment market, briefly explain whether these price ranges truly reflect the market prices. Why or why not?
Chapter 3 and 4
Q1. While defining the concept of market efficiency, briefly describe the theoretical basis for measuring efficiency under a perfectly competitive market.
Q2. What are the sources of market failure? Provide a real-world example.
Q3. What is the rationale for government intervention in economic and market activities?
Q4. Briefly describe the causes of the Great Depression of the 1930s.
Q5. What is Keynesian economics? How did it combat the Great Depression of the 1930s?
Q6. Based on the concepts of the law of demand and the law of supply in microeconomics, explain the difference between changes in quantity demanded (and/or changes in quantity supplied) and changes in demand (and/or changes in supply). Provide a real-world example and draw a graph. Provide an explanation for the graph. No specific data is required for drawing the graph.
Q7. How do you distinguish between the concepts of the D and S functions in microeconomics and the concepts of the AD and AS functions in macroeconomics? Why they are different?
Q8. Briefly explain how the problem with information asymmetry caused the financial collapse on Wall Street and financial trouble in the health-care service industry. Provide an example for each of these cases.
Q9. From your own real-life experience, provide an example of adverse selection and its possible moral hazard. How would it be possible to avoid or at least minimize the problem of adverse selection and moral hazard?
Q10. Make a list of the pros and cons of the individual mandate of Obamacare.