Econ Olympics

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Econ Olympics

  1. 1. The Econ Olympics
  2. 2. The Econ Olympics A big thanks to our proud sponsors:
  3. 3. The Econ Olympics Section Section Section 1 2.1 2.2 Section WILD 2.4 CARD
  4. 4. The Econ OlympicsSection 1 Three Positively Scarcity questions Normative Utility PPF Growth Chuck Norris does not own a house. He walks into random houses and people move.
  5. 5. Section 1 Total Pts. = In order for a resource to be scarce, it has to be and Limited and Desirable
  6. 6. Section 1 Total Pts. = What are the three questions every economy must ask itself? What to produce, how to produce, and for whom to produce.
  7. 7. Section 1 Total Pts. = “Based on GDP, 51 of the 100 largest economies in the world are corporations.” Is this a normative statement or a positive statement? Why? Positive, it’s a fact.
  8. 8. Section 1 Total Pts. = Use the numbers below to draw a Total Utility graph and a Marginal Utility graph. Quantity Utility 0 0 1 9 2 17 3 22 4 25 5 24
  9. 9. Section 1 Total Pts. = • What is the opportunity cost of producing 600 cars? • What does a point inside 3,000 the line signify, and a point outside the line? 2,000 B1 1,500 1,000 Computers Quantity of Inside – inefficient Computers Produced Outside – unattainable 0 Quantity of 600 800 1,000 Cars Produced 12/10/2009 9
  10. 10. Section 1 Total Pts. = Explain the difference between growth, development, and sustainability. Growth – increase in output (quantitative) Development – increase in standard of living (qualitative) Sustainability – balance between growth and preserving the environment
  11. 11. The Econ OlympicsSection 2.1 Price Demand Supply Ceiling Normal vs. Minimum Markets Inferior Wage When Chuck Norris wants an egg, he cracks open a chicken.
  12. 12. Section 2.1 Total Pts. = Give four examples of situations when demand could shift to the left. Price What is the relationship between price and quantity demanded? D1 Prices ↑ Qty. demanded ↓ Prices ↓Qty. demanded ↑ 0 Quantity
  13. 13. Section 2.1 Total Pts. = “A drought has destroyed the crops!” How will this affect supply Price of corn? S Why does the supply curve slope upwards? Supply will first shift to the left. D Supply has a positive relationship with price. 0 Quantity
  14. 14. Section 2.1 Total Pts. = Using a diagram, explain what a price ceiling is, and what three consequences are of doing this. Shortages Queuing (waiting lists) Rations Black markets for goods
  15. 15. Section 2.1 Total Pts. = Name the four markets and explain how they are different. Monopoly – one firm Oligopoly – a few large firms Monopolistic competition – many medium sized firms selling different products Perfect competition – countless small firms selling similar products
  16. 16. Section 2.1 Total Pts. = What is the difference between a normal good and an inferior good? Give examples of each. Normal good – as income increases, demand increases. (Cars) Inferior good – as income increases, demand decreases. (Use of public transportation)
  17. 17. Section 2.1 Total Pts. = Using a diagram, explain what a minimum wage Price Unemployment D S PriceFloor is, and what some 4 consequences are. 3 2 A minimum wage is a price floor, and employers cannot go below this wage. One 100 200 600 Quantityoflab or consequence will be unemployment.
  18. 18. The Econ OlympicsSection 2.2 Elasticity PED XED YED PES Revenue If you work in an office with Chuck Norris, don't ask him for his three-hole-punch.
  19. 19. Section 2.2 Total Pts. = What are three determinants of elasticity of demand? Time, necessity, luxury, substitutes, portio n of income
  20. 20. Section 2.2 Total Pts. = What does price elasticity of demand tell us? How sensitive the quantity demanded for product is based on a change in the price.
  21. 21. Section 2.2 Total Pts. = The price of product X has gone up from $2 to $3. As a result, the quantity demanded for product Y has gone up from 40 to 80. What is the XED? Are these goods complements or substitutes? Is this elastic or inelastic and what does this tell us? XED = 2 Substitutes Elastic – as the price goes up for one good, the quantity demanded for another good will go up by a greater percentage.
  22. 22. Section 2.2 Total Pts. = Your income increases by 3% which leads to demand for product Y to decrease from 300 to 270 units. What is the YED? Is this product normal or inferior? Is it elastic or inelastic and what does that mean? YED = -3.3 Inferior Elastic
  23. 23. Section 2.2 Total Pts. = What are two determinants of elasticity of supply that are different from demand? Closeness of producer substitutes, unused capacity
  24. 24. Section 2.2 Total Pts. = Last year, the price for tuition at a state university increased by 14%. As result of the price hike, the university saw an 8% drop in student enrolment. EVALUATE whether the university should raise prices, or lower prices next year if it would like to generate more revenue? PED = .57 Increase Prices because it’s inelastic
  25. 25. The Econ OlympicsSection 2.4 Negative Positive Market Externalit Externalit Failure y y A Common Public Diagrams Tragedy Goods Chuck Norris once participated in the running of the bulls. He walked.
  26. 26. Section 2.4 Total Pts. = Give an example of a market failure caused by a negative externality. Why is this considered a market failure? The recycling of computers leading to cancer in children. This is market failure because we don’t pay for this cost when purchasing or supply a computer.
  27. 27. Section 2.4 Total Pts. = Provide four examples of different negative externalities we talked about in class. Noise pollution (car alarms), air pollution, second-hand smoke, plastic bags polluting the seas, accidents from alcohol, poor housing
  28. 28. Section 2.4 Total Pts. = Provide three examples of different positive externalities we talked about in class and explain why they are considered market failures. Education, beautiful homes, vaccinations, public transportation…society is benefiting without having to pay the cost.
  29. 29. Section 2.4 Total Pts. = Explain the idea of The Tragedy of the Commons and what the solution to this tragedy often is. Areas that we all share and nobody owns are often poorly taken care of and exploited. The solution is to provide property rights to individuals or groups to take better care of these resources.
  30. 30. Section 2.4 Total Pts. = Explain how we determine what a public good is, give an example, and explain why the market won’t provide it. Non-rivalrous and non-excludable. Street lights. Too many people would benefit without paying. (Free riders.)
  31. 31. Section 2.4 Total Pts. = Price £12 Look at the diagram to the left. Label the lines. £7 Then explain what this £5 graph is showing. 80 100 Quantity Bought and Sold This graph shows a negative externality. We pay a marginal private cost for a good or service, but not the marginal social cost.
  32. 32. The Econ OlympicsWild Card! Chuck Yin Yang Billie Jean Norris Enrique Jessica William Iglesias Alba Shakespeare
  33. 33. Section 1 Total Pts. = 3 pts. WILD CARD Life is all about balance. Don’t work too much, but don’t just play life away. Don’t eat all sweets, but indulge from time to time in a creamy, chocolate fudge dessert. Keeping in mind this idea of balance, answer the following question while balancing yourself on your hands. What is the difference between scarcity and shortage? Scarcity is permanent and a shortage is temporary.
  34. 34. Section 2.1 Total Pts. = 4 pts. WILD CARD One of Michael Jackson’s most popular songs was “Billie Jean.” In honor of him and his song, dance to the first minute of Billie Jean. If your dancing is satisfactory, then you can answer the following question: What does Ceteris Paribus mean and why is it important in Economics? All else equal – to study the change on demand, we need to assume other things are the same. To study how price affects demand, we need to assume income, population, etc. stay the same.
  35. 35. Section 2.1 Total Pts. = 4 pts. WILD CARD It has been said that Chuck Norris could do 100 pushups with one hand, and memorize 100 pages of Economics at the same time. Using Chuck Norris’ strength and mental acuity as inspiration, do 20 pushups on your desk and then answer the following question. Explain the concept of “The Invisible Hand” in Economics. The self-regulating nature of the market. Prices will eventually rise or fall to their correct levels naturally as people make choices. There are no weapons of mass destruction in Iraq, Chuck Norris lives in Oklahoma.
  36. 36. Section 1 Total Pts. = 3 pts. WILD CARD Enrique Iglesias is unquestionably the greatest bilingual singer of all time. After singing the first 30 seconds of his song “Dimelo” answer the following question: What are the three types of economies we discussed, and some pros and cons of each one. Traditional Market Planned
  37. 37. Section 2.4 Total Pts. = 4 pts. WILD CARD Jessica Alba has earned her fame by developing into one of the most skillful actresses of our time. Create a scene where one person in your group pretends to be Jessica Alba. The scene must include some type of negative externality. After the scene, answer the following question: Explain the concept of a free rider and give an example. Someone who benefits from others buying goods because those goods are non-excludable or non-rivalrous. (A roommate buying a couch.)
  38. 38. Section 2.2 Total Pts. = 5 points WILD CARD William Shakespeare had a gift for words, and if rap music had been around in the 16th century, there is no doubt he would’ve created some phatjamz. Since he is now food for worms, your task is to write a rap about any aspect of Economics. Once your rap is finished, you and your group must perform it and answer the following question: What do the following elasticities tell us? Ped = .8 Pes = 3.4 Yed= - 1.9 Xed = - .7

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