Economics Summer Assignment
Mr. Moreno

Chapter 4
Section 1: Pages 79-83

1. State the Law of Demand in your own words:

2. What is the substitution effect and describe a time when you used it.

Section 2: Pages 85-88

4. Give an example of something you consider an inferior good and explain why it is.

5. Give an example of something you consider a complementary good and explain why it is.

6. What are two good that can be considered substitutes (also state what they would replace)?

7. What is the difference between a shift along a demand curve and a shift of a demand curve?
8. Decide whether each of these events would cause a change in demand (shifting the entire curve) or only a change in the quantity demanded (moving along the curve) of the goods. Explain.

a. Price of a chicken wrap drops:

b. By law, all teachers and students have to take the flu shot:

c. A cold freeze ruins almond trees:

d. Google decides to provide people with free internet access. What influence would this have on ATT, or Comcast?

Section 3: Page 90-96

9. Explain elasticity of demand in your own words.

10. List and summarize the 4 factors affecting elasticity.

11. List 2 products that you think are elastic in demand and state why.

12. Do you think heart medication is elastic or inelastic? Why?

13. How is total revenue calculated?

Chapter 5
Section 1: Pages 101-106

1. Explain the law of supply in your own words.

2. Explain the relationship between elasticity of supply and time.

3. Explain whether you think the supply of the following goods is elastic or inelastic, and why.

  1. Hotel rooms
  2. Super Bowl Tickets
  3. Student ID’s

Section 2: Pages 108-114

4. Explain how firms decide how much labor to hire to produce a certain level of output.

5. How does the marginal product of labor change as more workers are hired?

6. Identify each of these expenses for a textile mill is a fixed cost or a variable cost.

Repairs to a leaking roof:

Cotton:

Food for the mill’s cafeteria:

Night security guard:

Electricity:

Section 3: Page 116-121

9. How does input cost create a change in the supply of a good.

10. Identify 3 ways that the government can influence supply of a good.

11. Decide whether each of these events would cause an increase or decrease in supply of American-made backpacks.

a. The government raises the minimum wage of backpack workers to $40 an hour:

b. A new regulation requires firms to make backpacks out of expensive clear plastic:

  1. An engineer invents a machine that can sew ten backpacks in a minute speeding up production:

12. On page 121 read the article “Are Baseball Players Paid Too Much”. Answer the following questions in detail.

  1. What arguments might players make for free agency.
  2. How do the laws of supply and demand affect baseball players’ salaries?

Chapter 6
Section 1: Pages 125-131

  1. Explain how supply and demand create balance in the marketplace.
  1. Compare a market in equilibrium with a market in disequilibrium.
  2. How is a price floor different from a price ceiling?

Section 2: Pages 133-138

  1. What determinants create changes in price?
  2. Explain how the equilibrium price and quantity sold of eggs will change in the following cases. Remember that they need not move in the same direction.
  3. An outbreak of food poisoning is traced to eggs.
  4. Scientists breed a new chicken that lays twice as many eggs each week.
  5. A popular talk show host convinces her viewers to eat an egg a day.
  6. Read the economic profile on Michael Dell on p. 138. Answer the following questions.
  7. Summarize the factors that allowed Dell Computer Corp to sell personal computers at lower prices than its competitors could.
  8. What would be likely to happen to its prices if Dell Computer Corp opened stores across the country? Explain why.
  9. How has Dell Computer Corps strived to maintain its success against competitors who have imitated the Dell direct sales approach?

Section 3: Pages 139-145

  1. Analyze the role of prices in a free market. What are the advantages of a price-based system?
  2. How does a supply shock affect equilibrium price and quantity?
  3. How is rationing different from a price-based market system?