ECON 545 Inspiring Innovation--econ545.com

ECON 545 All Weeks Discussion (Devry)
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DEVRY ECON 545 Week 1 DQ 1 Supply and Demand
DEVRY ECON 545 Week 1 DQ 2 Elasticity and the Minimum Wage
DEVRY ECON 545 Week 2 DQ 1 Marginal Analysis
DEVRY ECON 545 Week 2 DQ 2 Controlling Costs
DEVRY ECON 545 Week 3 DQ 1 Mergers Acquisitions
DEVRY ECON 545 Week 3 DQ 2 Anti-Trust Policy and Microsoft
DEVRY ECON 545 Week 4 DQ 1 Macroeconomic News
DEVRY ECON 545 Week 4 DQ 2 Healthcare
DEVRY ECON 545 Week 5 DQ 1 Trade Deficits
DEVRY ECON 545 Week 5 DQ 2 Exchange Rates
DEVRY ECON 545 Week 6 DQ 1 Fiscal Policy
DEVRY ECON 545 Week 6 DQ 2 Monetary Policy
DEVRY ECON 545 Week 7 DQ 1 The Public Sector
DEVRY ECON 545 Week 7 DQ 2 Forecasting
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ECON 545 Entire Course + Final Exam (New)

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ECON 545 Week 1 DQ 1 Supply and Demand
ECON 545 Week 1 DQ 2 Elasticity and the Minimum Wage
ECON 545 Week 2 DQ 1 Marginal Analysis
ECON 545 Week 2 DQ 2 Controlling Costs
ECON 545 Week 3 DQ 1 Mergers Acquisitions
ECON 545 Week 3 DQ 2 Antitrust Policy
ECON 545 Week 3 Course Project 1 Microeconomic Analysis
(Situation C)
ECON 545 Week 4 DQ 1 Current Topic in Macroeconomics
ECON 545 Week 4 DQ 2 Healthcare
ECON 545 Week 5 DQ 1 Trade Deficits
ECON 545 Week 5 DQ 2 Exchange Rates
ECON 545 Week 6 DQ 1 Fiscal Policy
ECON 545 Week 6 DQ 2 Monetary Policy
ECON 545 Week 6 Course Project 2 Macroeconomic Analysis
(Situation C)
ECON 545 Week 7 DQ 1 The Public Sector
ECON 545 Week 7 DQ 2 Forecasting
ECON 545 Week 8 Final Exam
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ECON 545 Final Exam Set 2
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1. (TCO A) Suppose you are hired to manage a small manufacturing
facility that produces Widgets.
(a.) (15 points) You know from data collected on the Widget Market
that market demand has recently decreased and market supply has
recently increased. As manager of the facility, what decisions should
you make regarding production levels and pricing for your Widget
facility?
Remember that supply and demand are about the market supply and
market demand, which is bigger than your own company. You are
being given data on supply and demand for the whole market and are
being asked what effect that has on you as a small part of that market.
(b.) (15 points) Now, suppose that following the supply and demand
changes in (a), a substitute good goes down in price, and your costs of
production decrease. What new decisions will you make regarding
production levels and pricing for your Widget facility?
2. (TCO B) Suppose the governor of California has proposed
increasing toll rates on California's toll roads, and has presented two
possible scenarios to implement these increases. Following are
projected data for the two scenarios for the California toll roads:
Scenario 1: Toll rate in 2012: $10.00. Toll rate in 2016: $22.50

For every 100 cars using the toll roads in 2012, only 81.6 cars will use
the toll roads in 2016.
Scenario 2:
Toll rate in 2012: $10.00. Toll rate in 2016: $17.50
For every 100 cars using the toll roads in 2012, only 96.2 cars will use
the toll roads in 2016.
3.
(TCO C) You have been hired to manage a small manufacturing
facility whose cost and production data are given in the table below.
Total Total
. (TCO C) John operates a small business out of his home and has
very little in terms of fixed costs. Answer the next questions (Parts A
and B) on the basis of the following cost data for John’s firm
operating in pure competition:
(a.) (15 points) Refer to the above data. If the product price is $60, at
its optimal output, will the firm realize an economic profit, break
even, or incur an economic loss? How much will the profit or loss be?
Show all calculations.
(b.) (15 points) Refer to the above data. If the product price is $55 at

5. (TCO D) A software producer has fixed costs of $30,000 per
month and her Total Variable Costs (TVC) as a function of output Q
are given below:
a.) (15 points) If software can only be produced in the quantities
above, what should be the production level if the producer operates in
a monopolistic competitive market where the price of software at each
possible quantity is also listed above? Why? (Show all work.)
(b.) (15 points) What should be the production level if fixed costs rose
to $50,000 per month? Explain.
6. (TCO F)
(a.) (20 points) Suppose nominal GDP in 1999 was $100 billion and
in 2001 it was $270 billion. The general price index in 1999 was 100
and in 2001, it was 150. Between 1999 and 2001, the real GDP rose
by what percent?
(b.) Use the following scenario to answer questions (b1.) and (b2.).
In a given year in the United States, the total number of residents is
170 million, the number of residents under the age of 16 is 38 million,
the number of institutionalized adults is 15 million, the number of
adults who are not looking for work is 17 million, and the number of
unemployed is 10 million.
(b1.) (5 points) Refer to the data in the above scenario. What is the
size of the labor force in the United States for the given year?

unemployment rate in the United States for the given year?
7. (TCO G and H)
(a.) (15 points) Suppose your local Congress representative suggests
that the federal government should NOT intervene in the baseball
ticket market to stop runaway price increases. Would you say that this
view basically supports the Keynesian or the Monetarist school of
thought? Why? What position would the opposing school of thought
take on this issue? (Be brief—you can answer this in 2 or 3 brief
paragraphs).
(b.) (10 points) Any change in the economy’s total expenditures
would be expected to translate into a change in GDP that was larger
than the initial change in spending. This phenomenon is known as the
multiplier effect. Explain how the multiplier effect works.
(c.) (15 points) You are told that 75 cents out of every extra dollar
pumped into the economy goes toward consumption (as opposed to
saving). Estimate the GDP impact of a positive change in government
spending that equals $25 billion.
8. (TCO G)
(a.) Reserve requirement for banks is set at 5%. Your firm withdraws
$42,000 on its line of credit at the Security Bank to purchase
equipment for expansion. The equipment vendor deposits the amount
that he receives from you at his bank, The Highland Bank.

(10 points) By how much has each bank’s excess reserves changed as
a result of your withdrawal and expenditure?
(10 points) What is the maximum amount of new money that can be
created in the banking system as a result of your purchase? Show all
work.
(b.) (10 points) suppose that the Security Bank discovers its reserves
will temporarily fall slightly short of those legally required. How
might it remedy this situation through the Federal Funds market?
(10 points) Explain how the Fed manipulates the Federal Funds Rate
in order to achieve macroeconomic objectives.
9. (TCO E and I) Let the exchange rate be defined as the number of
dollars per Japanese yen. Assume there is an increase in U.S. interest
rates relative to that of Japan.
(a.) (10 points) Would this event cause the demand for the dollar to
increase or decrease relative to the demand for the yen? Why?
(b.) (10 points) Has the dollar appreciated or depreciated in value
relative to the yen?
(c.) (10 points) Does this change in the value of the dollar make
imports cheaper or more expensive for Americans? Are American
exports cheaper or more expensive for importers of U.S. goods in
Japan? Illustrate by showing the price of a U.S. e-reader in Japan
before and after the change in the exchange rate.

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ECON 545 Week 1 DQ 1 Supply and Demand
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What is the difference between a change in demand versus a change
in quantity demanded? A change in supply versus a change in
quantity supplied? Why is it so important to differentiate between
these similar-sounding terms?
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ECON 545 Week 1 DQ 2 Elasticity and the
Minimum Wage
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What are your thoughts about minimum wage legislation? What kind
of a price-control policy is this? Who gains? Who loses? Are there
alternatives to this legislation for achieving the same policy
objectives? What role do demand and supply elasticities play in
determining outcomes?
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ECON 545 Week 2 DQ 1 Marginal Analysis

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Why is marginal analysis important in economics? How do the
tutorials Basics of Marginal Analysis and Understanding and
Applying Marginal Analysis at the end of this week's
lecturereinforce the concepts of marginal analysis? How can any firm
find the right production level which guarantees maximum profit (or
minimum loss)?
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ECON 545 Week 2 DQ 2 Controlling Costs
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Name some of the ways firms attempt to control their costs. How does
your firm control costs? The key here in keeping this question
interesting is that reducing the workforce or having one person do the
work of three people are not the only ways to control costs. I'm
looking for more creative ways. Maybe you can think of some that
your firm is not currently using. Be creative here.
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ECON 545 Week 2 Quiz

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1) Consider the market for ping golf clubs.
Suppose the price of memberships at local golf courses increases. Use
the line drawing tool to show how this affects the demand for ping
golf clubs by drawing a new demand curve. Assume memberships at
local golf courses and ping golf clubs are complements. Properly label
this line.
Instead, suppose the price of tennins rackets decreases. If tennis
rackets and goal substitutes, then the demand for ping golf clubs will
………..
2) State whether each of the following events will result in a
movement along the demand curve for McDonald’s Big Mac
hamburgers or whether it will cause the curve to shift
a) The price of Burger King’s Whopper hamburgers declines. This
will cause
b) McDonald’s eliminates $1.00 off coupons. This will cause
c-d) KFC raises the price of a bucket of fried chicken. This will
e) The U.S economy enters a period of decline in incomes. This will
cause
3) Imagine that the table on the right shows the quantity demanded of
UCG boots at fine different prices in 2014 and in 2015.
Which of the following variables could cause the demand for UCG
boots to change as indicated from 2014 to 2015?

4) Imagine that the curves shown in the accompanying figure
represent two demand curves for traditional wings (basket of six) at
Buffalo Wild Wings.
The movement from point A to B on Dl is caused by
Indicate which of the following would cause a movement from point
A to C. (Check al that apply)
The difference between a change in supply and a change in the
quantity supplied is that the latter is
5) Suppose the curves in the figure to the right represent two supply
curves for traditional wings (basket of six) at Buffalo wild Wings
The movement from point A to B os S1 is caused by
Indicates which of the following would cause a movement from point
A to C
6) Suppose that the table on the right shows the quantity supplied of
UCG boots at five different prices in 2014 and in 2015
Refer to the table to the right note the change in the quantity supplied
of UCG boots from 2014 to 2015
Which of the following variables could explain the change in the
quantity supplied observed in 2015?
If the market price ‘Pmkt’ is equal to the price ‘Po’, then quantity
supplied is ……. Quantity demanded and the market is in …….
7) Consider the market for gasoline, illustrated in the figure to the
right.

The equilibrium quantity of gasoline is … million gallons and the
equilibrium price $......per gallon
If instead the market price were $1.75, then there would be a …….. of
… million gallons
8) If a 22 percent increase in the price of cheerios causes a 27 percent
reduction in the number of boxes of cereal demanded, the price
elasticity of demand for cheerios is - ……….
The demand for cheerios is ……
9) The following table gives data on the price of rye and the number
of bushels of rye sold in 2013 and 2014
a) Calculate the change in the quantity of rye demanded divided by
change in the price of rye. Measure the quantity of rye demanded in
bushels. The change in the quantity of rye demanded divided by the
change in the price of rye in bushels is………
b) Calculate the change in the quantity of rye demanded divided by
change in the price of rye, but this time measure the quantity of rye
demanded in million of bushels. The change in the quantity of rye
demanded divided by the change in the price of rye in million bushels
is………
Compare to part a, the answer to part b is ……. In absolute terms
c) Finally assuming the demand curve for rye did not shift between
2013 and 2014, use the information in the table to calculate the price
elasticity of demand for rye. Using the midpoint formla, the price
elasticity of demand for rye is ….

10) Suppose the price elasticity of demand for cereal is -0.83.
If so then the price for demand for cereal is…..
In another example, assume the price elasticity of demand for a
particular magazine is …….
The price elasticity of demand for the magazine is ….
11) Consider the polar case where the price elasticity of demand is
perfectly inelastic
Use the line drawing tool to draw a perfectly inelastic curve.
12) Consider the two demand curves illustrated in the figure to the
right
Which of the two is relatively more elastic?
13) Suppose that Bill owns an automobile collision repair shop and
the table below shows the quantity of cars repaired per month
according to how many workers Bill hires. Assume he pays each
worker $6,000 per month and his fixed cost equals $5,000 per month
14) Suppose a pizza parlor has the following production costs: $5.00
in a labor per pizza, $4.00 in ingredients per pizza, $0.80 in electricity
per pizza, $1,000 in restaurant rent per month, and $5550 in insurance
per month
Assume the pizza parlor produces 6,000 pizzas per month
What is the variable cost of production is ….?

What is fixed cost of production
The fixed cost of production is $...
15) The table below shows the quantity of workers and total output
for a local pizza parlor. Answer the following questions based on this
table
a) When the owner hires 4 workers, the average product of labor is
….. pizzas
b) The marginal product of fifth worker is
c) If the marginal product of the second worker is 6, then total number
of pizzas produced when 2 workers are hired is ,,, pizzas
d) Assuming the marginal product of the second worker is 6, the law
of diminishing marginal returns set in with the
16) What are the three conditions for a market to be perfectly
competitive?
17) What is a price taker?
18) Consider the graph below showing the market demand and supply
for com. Use the line drawing tool to graph the demand for com
produced by one farmer, properly label this line
19) Which of the following are perfectly competitive markets?

20) Refer to the following table?
Suppose the price of what rises to $5.00 per bushel. Farmer parker
will maximize profits by producing…. Bushels of wheat.
He will make a profit of $.........
21) The following table shows Farmer Parker’s revenue, cost, and
profit from wheat farming
Farmer parker’s fixed costs are $
Suppose that fixed cost increase by ……
Farmer parker’s new profit-maximizing level of production after the
increase in fixed cost is ….
The amount of profit that farmer parker will earn after increase in
fixed cost is …..?
22) Sophia grows Christmas tree. Her cost of production is shown in
the table below
Suppose the market for Christmas tree is perfectly competitive and
that market price for Christmas tree is $152 per tree
How many Christmas tree should Sophia grow?
What is Sophia’s profit?
23) Frances sells earnings in the perfectly competitive earning
market. Her output per day and costs are seen in the table to the right.

a) Of the current equilibrium price in the earing market is $1.80, what
price will Frances charge?
b) Find the correct quantities for the missing values in the table
c) What quantity of earings will maximize France’s Profit?
24) The fig to be illustrates the average total cost (ATC) and
marginal cost (MC) curves for an orange farmer in California.
Assume market for oranges is perfectly competitive
Suppose the market price of orange is $28.00 per crate
25) Which of the following is an expression of profit for a perfectly
competitive firm?
Profit for a perfectly competitive firm can be expressed as
26) Farmer brown grows a peaches. The average total cost and
marginal cost of growing peaches for an individual farmer are
illustrates in the graph to right
Assume the market for peaches is perfectly competitive and that the
market price is $38 per box. Also assume that farmer Brown is
producing the amount of peaches that maximizes profits.
27) Lauren grows grapes. Her average variable cost (AVC), average
total cost (ATC), and marginal cost (MC) of production are illustrated
in fig to the right
Assume the market for grapes is perfectly competitive and the market
price is $4.00 per crate

Characterize Lauren’s economic profits. Assume she produces such
that she maximizes profits in short run
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ECON 545 Week 3 Course Project1 Microeconomic
Analysis (Situation A)
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ECON545: Project 1—Microeconomic Analysis
The Microeconomic Paper tests your ability to apply economic
principles to a business decision. Select one situation from the items
outlined below: A to D. Complete the paper on the selected situation
as specified below. The completed paper is a professional report and
is due in Week 3 (230 points). See the grading rubric at the end of this
document. Be sure to use the DeVry library for finding data; avoid
questionable sources, such as Wikipedia.
The following is a list of the specific required information, research,
graphs, and math to be included in each answer regardless of the
scenario chosen.
1. Demand Determinants:

a. Each individual determinant analyzed for your situation, with
examples applicable to your situation (5 points each) and research (3
points each) showing current Demand data or most recent past data,
except for the Expectations Determinant in which you need to use
data estimating future market conditions.
b. (20 points) Price Elasticity of Demand facing you in your scenario,
including actual calculation of it using the midpoint formula. If you
can’t find data, then determine the Price Elasticity from the
Characteristics and make up numbers to use. Be sure to identify this if
you use this approach. This will help you in deciding the slope of
your Demand curve below.
c. (10 points) Graph the Demand facing your situation. Note that this
requires information from the Supply Determinant analysis before
deciding how to draw the curve(s), as you may need a separate MR
curve.
2. Supply Determinants:
points each) showing current Supply data or most recent past data,
i. (40 points) You need to be very specific in the Cost of Production
Determinant to identify Fixed, Variable, and Marginal Cost in order
to derive your Supply curve for the graphing component. You will
need to explain and show how Profit Maximization or Loss
Minimization output and price are determined. You will need to do
the math using actual figures [cited] or your own estimated figures
[identified as such] and explain why you expect Short Run Economic
or Normal Profits, Acceptable Loss or temporary Shut Down and how
you will know which it is.

ii. The Number of Sellers determinant must contain your analysis of
the kind of market structure in which your firm or labor service will
be sold.
b. (20 points) Price Elasticity of Supply you have based on the Cost of
Production changes as output changes, including actual calculation of
it using the midpoint formula. If you can’t find data, then determine
the Price Elasticity from the Characteristics and make up numbers to
use. Be sure to identify this if you use this approach. This will help
you in deciding the slope of your Supply curve.
c. (10 points) Graph your Supply situation using the numbers from
your earlier Cost of Production analysis.
3. Recommendations—(40 points) what are your recommendations
explained by your analysis?
4. Paper presentation—(10 points) good format, citations, lack of
spelling errors, etc.
Situation A
Jenny, your niece, is a smart high-school student who wants to make
intelligent choices for her future. Hearing of your course in business
economics, she has e-mailed you asking for advice on whether to
become a doctor and on the best location to practice it. She recognizes
the high costs of tuition and the years of study involved in becoming a
doctor. She wants to evaluate if that career choice is an optimal
decision for her, so she has asked you for advice.
Having read the piece “Fewer Physicians Move, a Sign of Career
Caution” on page 20 of the textbook, you recognize the significance
of such a career decision for Jenny. You decide to educate yourself
about the market for physicians in terms of supply and demand,
elasticity, costs of production, pricing, and economic or normal profit

or loss. You want to provide Jenny with the most informed advice
possible.
Situation B
Your neighbor Cindy wants to start a contracting business for
installing solar panels. She has heard of the cost savings that
households and businesses can make each year by installing solar
panels on their roofs. Cindy has also heard of government incentives
for installing solar panels. Being concerned about the environment
and wishing to reduce pollution, Cindy thinks installing solar panels
also serves a good social purpose. But she does not want to risk her
life savings on a venture that might not succeed or become profitable
enough. After hearing from you about taking this course in business
economics, she decides to ask you for advice.
At first you are hesitant to give investment advice. Then you read the
piece “US boosts ‘game-changer’ solar technology in bid for global
market share” on page 374 of the textbook. You realize there are more
pieces to the decision than Cindy is considering. You decide to
research the market in terms of supply and demand, elasticity, costs of
production, pricing, and economic or normal profit or loss. You want
to provide Cindy with the most informed advice possible.
Situation C
Cousin Edgar is always thinking of the next business idea. This time,
he plans to invest in buying two gas stations. He reckons American
consumers have come to accept the high gasoline prices, and
estimates world prices for gasoline to increase even further with high
demand from India and China. Besides, Cousin Edgar thinks he will
make a good profit on the sale of convenience items at each station.
But before buying the gas stations, he decides to ask for your advice
because you are taking this course in business economics.

You happened to read the piece “$4-a-Gallon Gas Fueling Fears for
Recovery” on page 196 of the textbook. Being skeptical of Cousin
Edgar’s optimism on the profitability of selling gasoline and
convenience items, you decide to research the market in terms of
supply and demand, elasticity, costs of production, pricing, and
normal or economic profit or loss. You want to provide Cousin Edgar
with the most informed advice possible.
Situation D
After hearing of you taking this course in business economics, Uncle
Dan has e-mailed you asking for advice on his 100-acre corn farm. He
mentioned how, after 30 years of growing corn, he wishes to leave
that commodity’s market and enter a more profitable market instead.
He is thinking of planting some organic crop. But he is not sure which
crop would be most profitable. He already knows that going organic
requires changing some of his practices to qualify for the certification.
Therefore he wants to know how much it costs to become a certified
organic farmer, and which crop would be best suited for him to grow
given his current equipment.
Luckily before you can find time to answer Uncle Dan’s e-mail, you
read the piece on organic farming in the United Kingdom on page 422
of the textbook. Recognizing the costs and risks for Uncle Dan in
making the switch, you decide to research the market in terms of
supply and demand, elasticity, production costs, pricing, and
economic or normal profit or loss. You decide to educate yourself
about organic farming so that you can provide Uncle Dan with the
most informed advice possible.
Microeconomic Paper as a Professional Report

Your paper should be organized into five parts as listed below.
1. Title Page—Name, course, and date
2. Introduction to situation, but do NOT copy the scenario. Briefly
summarize the situation and identify the microeconomic issue(s) to be
decided from the perspective of the organization.
3. Relevant Economic Principles: Determinants of Demand, Supply,
etc. and Relevant Data
Identify the variables that are critical in addressing the issue(s).
Gather and present the relevant data on the variables by searching the
DeVry Online Library. Ask a librarian for help if needed. Use in-text
citation to report the source(s) of the data. Graphs may be included
here.
4. Recommendations and Economic Justification
Formulate and present your recommendations for addressing the
issue(s) based on the relevant data and economic principles identified
above. Justify your recommendations in terms of the economic impact
on those affected.
5. References
List the full references for at least five sources alphabetically in APA
format.
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Analysis (Situation B)

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scenario chosen.
b. (20 points) Price Elasticity of Demand facing you in your
scenario, including actual calculation of it using the midpoint formula.
If you can’t find data, then determine the Price Elasticity from the

c. (10 points) Graph the Demand facing your situation. Note that
this requires information from the Supply Determinant analysis before
curve.
i. (40 points) You need
to be very specific in the Cost of Production Determinant to identify
Fixed, Variable, and Marginal Cost in order to derive your Supply
curve for the graphing component. You will need to explain and show
how Profit Maximization or Loss Minimization output and price are
determined. You will need to do the math using actual figures [cited]
or your own estimated figures [identified as such] and explain why
you expect Short Run Economic or Normal Profits, Acceptable Loss
or temporary Shut Down and how you will know which it is.
ii. The Number of Sellers
determinant must contain your analysis of the kind of market structure
in which your firm or labor service will be sold.
b. (20 points) Price Elasticity of Supply you have based on the
Cost of Production changes as output changes, including actual
calculation of it using the midpoint formula. If you can’t find data,
then determine the Price Elasticity from the Characteristics and make
up numbers to use. Be sure to identify this if you use this approach.
This will help you in deciding the slope of your Supply curve.

Situation A
possible.
Situation B

Situation C

Situation D
3. Relevant Economic Principles: Determinants of Demand,
Supply, etc. and Relevant Data

here.
on those affected.
5. References
format.
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Analysis (Situation C)
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scenario chosen.
curve.

be sold.
Situation A

possible.
Situation B

Situation C
Situation D

2. Introduction to situation, but do NOT copy the scenario.
Briefly summarize the situation and identify the microeconomic
issue(s) to be decided from the perspective of the organization.
3.Relevant Economic Principles: Determinants of Demand,
Gather and present the relevant data on the variables by searching
the DeVry Online Library. Ask a librarian for help if needed. Use
in-text citation to report the source(s) of the data. Graphs may be
included here.
4.Recommendations and Economic Justification
issue(s) based on the relevant data and economic principles
identified above. Justify your recommendations in terms of the
economic impact on those affected.
5.References
format.

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Analysis (Situation D Rajeev, P.F. Chang chain of
restaurants )
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scenario chosen.

b. (20 points) Price Elasticity of Demand facing you in your
scenario, including actual calculation of it using the midpoint formula.
If you can’t find data, then determine the Price Elasticity from the
c. (10 points) Graph the Demand facing your situation. Note that
this requires information from the Supply Determinant analysis before
curve.
i. (40 points) You need
to be very specific in the Cost of Production Determinant to identify
Fixed, Variable, and Marginal Cost in order to derive your Supply
curve for the graphing component. You will need to explain and show
how Profit Maximization or Loss Minimization output and price are
determined. You will need to do the math using actual figures [cited]
or your own estimated figures [identified as such] and explain why
you expect Short Run Economic or Normal Profits, Acceptable Loss
or temporary Shut Down and how you will know which it is.

ii. The Number of Sellers
determinant must contain your analysis of the kind of market structure
in which your firm or labor service will be sold.
b. (20 points) Price Elasticity of Supply you have based on the
Cost of Production changes as output changes, including actual
calculation of it using the midpoint formula. If you can’t find data,
then determine the Price Elasticity from the Characteristics and make
up numbers to use. Be sure to identify this if you use this approach.
This will help you in deciding the slope of your Supply curve.
Situation D
After hearing of your taking this course in Business Economics, your
college friend has emailed you asking for advice on opening a
restaurant. Your friend Rajeev reminded you of his popular recipes
for Indian food, and shared his dream of building a franchise business
modeled on the P.F. Chang chain of restaurants. He reckons that
creating special fusion recipes based on a popular ethnic cuisine will
provide the restaurant chain with sufficient differentiation to become
profitable and to grow nationwide.
Luckily before you could find time to answer Rajeev’s email, you
read the pieces on Starbucks and opening a restaurant, on page 425 of
the textbook. Recognizing the costs and risks for Rajeev, you decide
to research the market in terms of supply and demand, elasticity,

production costs, pricing, normal profit, and the supply chain for
ethnic cuisine. You decide to educate yourself about the restaurant
business so you can provide Rajeev with the most informed advice
possible.
3. Relevant Economic Principles: Determinants of Demand,
here.
on those affected.

5. References
format.
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Analysis (Situation D Uncle Dan)
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scenario chosen.

curve.

be sold.
Situation A

possible.
Situation B
Situation C

Situation D

3. Relevant Economic Principles: Determinants of Demand, Supply,
etc. and Relevant Data
here.
on those affected.
5. References
format.
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ECON 545 Week 3 DQ 1 Mergers Acquisitions
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Have you ever been involved in a merger or acquisition? If so, tell us
about your experiences. If not, comment on this week's tutorial, "The
Private Sector."
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ECON 545 Week 3 DQ 2 Antitrust Policy
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Review and chose a firm of your choice provided by your instructor.
Is this firm a monopoly? In what ways could it be considered a
monopoly? What markets are involved? What anti-trust legislation
would apply? Is anti-trust legislation "fair" to your chosen firm? Why
or why not?
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ECON 545 Week 4 DQ 1 Current Topic in
Macroeconomics
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Scour the national media for a credible macroeconomic current issue
(many good sources are available online) in which Chapters 19-21 is
at the heart of the matter. Summarize your article for your colleagues
and attach a link to your article. Make sure you appropriately refer to
the textbook sections that apply to your chosen article.

==============================================
ECON 545 Week 4 DQ 2 Healthcare
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The healthcare sector is often cited as being fraught with just about
every economic imperfection that is known to humankind. Can you
identify and briefly describe ONE of these imperfections? Do you
know of any examples?
==============================================
ECON 545 Week 5 DQ 1 Trade Deficits
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What have been some major causes of the large U.S. trade deficits
since 1992? What is a major benefit (you could address that issue) or
a major cost (or you could address that issue) associated with trade
deficits?
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ECON 545 Week 5 DQ 2 Exchange Rates
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Do a little research about foreign exchange traders. It's a big business;
how do they make money? What is the relationship between FX rates
and interest rates?
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ECON 545 Week 5 Quiz
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1. Suppose that the reserve requirement is 5%. What is the effect
on the total checkable deposits in the economy if banks reserves
increased by $60 billion?
2. The formula for the simple deposit multiplier is?
3. (Related to Solved Problem # 1) Suppose that simple economy
produces only the following goods and services; shoes, hamburgers,
shirts and cotton. Further, assume that all of the cotton is used in the
production of shirts.
Use the information in the following table to calculate Nominal Gross
Domestic Product ( NGDP) for 2015.
4. Why might cutting government spending as a fiscal policy be a
more difficult policy than the use of the monetary policy to slow
down an economy experiencing inflation?

A. The legislative process works quickly
B. The government has more concentrated power than the Fed
C. The economy may have already slowed
D. The Legislative process experiences longer delays than monetary
policy
5. Suppose that Deja owns a McDonald’s franchise. She decides to
move her restaurant’s checking account to Wells Fargo, which causes
the changes shows on the following T-account
Reserves: -$100,000 Deposits:
$100,000
If the required reserve ratio is 0.05 percent and Wells Fargo currently
has no excess reserves, the maximum loan Wells Fargo can make as a
result of this transaction is
6. (related to solved problem #3) Suppose the information in the
following table is simple economy that produces only the following
four goods; shoes, hamburgers, shirts and cotton. Further, assume that
all of the cotton is used to produce shirts.
7. Suppose the economy is initially in long run equilibrium. The
Fed enacts a policy to decrease the discount rate. In the short run, this
expansionary monetary policy will cause;
a. A shift from SRAS to SRAS2 and a movement to point B, with a
lower price level and higher output.

b. A shift from AD1 to AD2 and a movement to point B, with a
higher price level and a higher output.
c. A shift from SRAS2 to SRAS1 and a movement to point D, with a
higher price level and a lower output.
d. Shift from AD2 to AD1 and a movement to point C with a lower
price level and the same output.
8. Excess Reserves
a. Are the deposits that banks do not use to make loans
b. Are loans made at above market interest rates
c. Are reserves banks keep to meet the reserves requirement
d. Are reserves banks keep above the legal requirement
9. A simple economy produces two goods, Apple pies and
software. Price and Quantity data are as follows;
10. Consider the following table;
11. What can we expect from the Federal Reserve Bank if it seeks to
move the economy in the direction of a long run macroeconomics
equilibrium?
a. The Fed will pursue an expansionary fiscal policy
b. The Fed will pursue a contractionary monetary policy
c. The Fed will pursue an expansionary monetary policy
d. The Fed will pursue a contractionary fiscal policy
What will happen to the showing indicators?
Actual Real GDP;

Potential Real GDP;
Price Level;
Unemployment
12. Suppose you deposit a $800 cash into your checking account; By
how much will the total money supply increase as a result when the
required reserve rate is 0.10?
13. The Federal Reserve cannot affect Real GDP directly, therefore,
the Fed typically uses the following as its policy target?
a. Inflation
b. Government expenditures
c. Taxes
d. Interest rates
14. If the Federal Reserve purchases $130 million worth of US
treasury bills from the public, the money supply will
15. The unemployment rate;
a. Shows the percentage of the population that is considered
unemployed.
b. Is the amount of the labor force that is not working
c. Is the amount of people in the population that are not working
d. Shows the percentage of the labor force that is considered
unemployed.
16. When the Federal Reserve increases the discount rate as a part of
a contractionary monetary policy, there is;
a. A decrease in the money supply and an increase in the interest rate

b. A decrease in the money supply and a decrease in the interest rate
c. An increase in the money supply and a decrease in the interest rate
d. An increase in the money supply and an increase in the interest
rate
17. Suppose the economy is in long run equilibrium, the Fed decides
to increase the discount rate, in the short run, this contractionary
monetary policy will cause;
a. A shift from SRAS 1 to SRAS2, and a movement to point A, with
a higher price level and same output
b. A shift from SRAS 2 to SRAS 1 and a movement to point B, with
a lower price level and a higher output
c. A shift from AD2 to AD1 and a movement to point D with a
lower price level and lower output
d. A shift from AD1 to AD2 and a movement to point B with a
higher price level and higher output
18. According to the multiplier effect, an initial decrease in the
government purchases decrease the real GDP by initial decrease in
government purchases.
19. In an economy, the working age population is 300 million of this
total;
240 million workers are employed
9 million workers are unemployed
42 million workers are not available for work (homemakers, full time
students, etc)

6 million workers are available for work, but are discourage, and thus
are not seeking work
3 million workers are available for work but are not currently seeking
work due to transportation and child care problems.
The unemployment rate in this economy
20. Suppose you deposit $1,000 cash into your checking account, By
how much will checking deposits in the banking system increase as a
result when the required reserve ratio is 0.40%
The change in checking deposit is equal
21. Suppose the government increases expenditures by $110 billion
and the marginal propensity to consume is 0.80 . By how will
equilibrium GDP change?
The change in equilibrium GDP
==============================================
ECON 545 Week 6 Course Project 2
Macroeconomic Analysis (Situation A)
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ECON545: Project 2—Macroeconomic Analysis
The Macroeconomic Paper tests your ability to apply economic
principles to a business decision considering the impact of
macroeconomic variables. Select one situation from the items outlined
below: A to D. Complete the paper on the selected situation as
specified below. The completed paper is a professional report and is

due in Week 6 (260 Points). See the grading rubric at the end of this
document. Be sure to use the DeVry library to find data, and avoid
Each of the scenarios has a list of Macroeconomic areas you are to
address, with sources, in your answer. Briefly you are to research and
show how these apply to your scenario: GDP growth rate (20 points),
the business cycle (30 points), fiscal policy and level of
unemployment (50 points), monetary policy and interest rates (50
points), international trade (40 points), and demographics (20 points).
Situation A
Rick, your friend, runs a small manufacturing plant that produces
parts for the auto industry. Rick is thinking of expanding his
operations to meet the increasing demand from car manufacturers.
Hearing of your taking this course in business economics, he asks you
for advice on how to go about making the expansion decision.
At first you are reluctant to give investment advice, but then you
happen to read the piece “U.S. Auto Sales Estimates Cut as
Confidence Slows Rebound” on page 634 of the textbook. You
suddenly realize that Rick needs to take a number of macroeconomic
variables into consideration for the expansion decision. You decide to
research the economy in terms of GDP growth rate, interest rates,
level of unemployment, the business cycle, fiscal policy, monetary
policy, international trade, and demographics. You want to provide
Rick with the most informed advice possible.

Situation B
piece “Postal Service Considering Cutting 120,000 Jobs” on page 668
of the textbook. You realize there are more pieces to the decision than
Cindy is considering. You decide to research the economy in terms of
GDP growth rate, interest rates, level of unemployment, the business
cycle, fiscal policy, monetary policy, international trade, and
demographics. You want to provide Cindy with the most informed
advice possible.
Situation C
he plans to invest in buying four gas stations. He reckons American

You happened to read the piece “Bank Lending Signals a
Strengthening Economy” on page 856 of the textbook. Cousin Edgar
needs financing for his new business, but you realize there are more
macroeconomic factors he needs to consider in timing his decision.
You decide to research the economy in terms of GDP growth rate,
interest rates, level of unemployment, the business cycle, fiscal
policy, monetary policy, international trade, and demographics. You
want to provide Cousin Edgar with the most informed advice
possible.
Situation D
After hearing of your taking this course in business economics, Uncle
He is thinking of subdividing his land and building homes and shops.
He reckons he could make a good profit by selling the homes and
renting the shops.
Before you can find time to answer Uncle Dan’s e-mail, you read the
piece “Will the Fed’s New Policies Revitalize the Housing Market?”
on page 896 of the textbook. Recognizing the costs and risks for
Uncle Dan in making the switch, you decide to research the economy
in terms of GDP growth rate, interest rates, level of unemployment,
the business cycle, fiscal policy, monetary policy, international trade,
and demographics. You decide to educate yourself about
macroeconomics so that you can provide Uncle Dan with the most
informed advice possible.
Macroeconomic Paper as a Professional Report

1. Title Page: Name, class, and date
2. Introduction to situation but do NOT copy the scenario. Briefly
summarize the situation and identify the macroeconomic issue(s) to
be decided from the perspective of the organization.
3. Business Cycles, Unemployment, Inflation, International -
Comparative Advantage, Exchange Rates, Trade, Etc., Monetary
Policy and Interest Rates, and Fiscal Policy and Unemployment
here.
on those affected.
5. References
format.
==============================================

Macroeconomic Analysis (Situation B)
www.econ545.com
Situation A

Situation B

advice possible.
Situation C
possible.
Situation D

renting the shops.
here.

on those affected.
5. References
format.
==============================================
Macroeconomic Analysis (Situation C)
www.econ545.com

Situation A
Situation B

advice possible.
Situation C

possible.
Situation D
renting the shops.
2. Introduction to situation but do NOT copy the scenario.
Briefly summarize the situation and identify the macroeconomic
issue(s) to be decided from the perspective of the organization.

here.
4.Recommendations and Economic Justification
on those affected.
5.References
format.
==============================================
Macroeconomic Analysis (Situation D, Uncle Dan)
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Situation A
Situation B

advice possible.
Situation C

possible.
Situation D
renting the shops.

here.
on those affected.
5. References
format.
==============================================
ECON 545 Week 6 DQ 1 Fiscal Policy
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What fiscal policies are required to fight unemployment? Which ones
are required to fight inflation? What are some of the downside risks
and potential problems involved when using fiscal policy?
==============================================
ECON 545 Week 6 DQ 2 Monetary Policy
www.econ545.com

What are the monetary policies required to fight unemployment?
What about those required to fight inflation? What are some of the
downside risks and potential problems involved when using monetary
policy?
==============================================
ECON 545 Week 7 DQ 1 The Public Sector
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What is the appropriate balance between private and public (i.e.,
government) activity? Think of a case where the government has
intervened (or it was suggested that government intervene) in a
previously private market (e.g. Chrysler, tariffs on Japanese luxury
cars, the airline industry, etc). What other examples can you think of?
Using a marginal benefit/marginal cost analysis, support or argue
against the intervention.
==============================================
ECON 545 Week 7 DQ 2 Forecasting
www.econ545.com
Let's discuss one of the most important areas of economics, namely
the use of leading economic indicators to forecast the future direction

of the macro economy. What websites are helping you gain a better
understanding of where the economy is heading in the next 12
months?
==============================================
ECON 545 Week 8 Final Exam (Devry)
www.econ545.com
1.Question :(TCO A) Suppose you are hired to manage a small
manufacturing facility that produces Widgets.
(a.) (15 points) You know from data collected on the Widget Market
that market demand and market supply have both increased recently.
As manager of the facility, what decisions should you make regarding
Remember that supply and demand are about the market supply and
market demand, which is bigger than your own company. You are
being given data on supply and demand for the whole market and are
being asked what effect that has on you as a small part of that market.
(b.) (15 points) Now, suppose that following the supply and demand
changes in (a), a substitute good goes up in price, and your costs of
production increase. What new decisions will you make regarding
2.Question :(TCO B) Here is some data on the demand for
marshmallows:
Price Quantity
$10 100

$ 8 300
$ 6 700
$ 4 1300
$ 2 2200
(a.) (15 points) Is demand elastic or inelastic in the $6-$8 price range?
How do you know?
(b.) (15 points) If the table represents the demand faced by a
monopoly firm, then what is that firm’s marginal revenue as it
increases output from 1300 units to 2200 units? Show all work. (Be
careful here!)
3. Question : (TCO C) You have been hired to manage a small
manufacturing facility whose cost and production data are given in
the table below.
Total Total
Workers Labor Cost Output Revenue
1 $500 100 $700
2 1000 280 1150
3 1500 440 1440
4 2000 540 1570
5 2500 600 1670
6 3000 630 1710
7 3500 640 1730
(a.) (6 points) What is the marginal product of the second worker?
(b.) (6 points) What is the marginal revenue product of the fourth
worker?
(c.) (6 points) What is the marginal cost of the first worker?

(d.) (12 points) Based on your knowledge of marginal analysis, how
many workers should you hire? Explain you answer.
4. Question : (TCO C) Answer the next questions on the basis of the
following cost data for a firm in pure competition:
OUTPUT ------ TFC ---------- TVC
0 $100.00 0.00
1 100.00 70.00
2 100.00 120.00
3 100.00 150.00
4 100.00 200.00
5 100.00 270.00
6 100.00 360.00
(a.) (15 points) Refer to the above data. If the product price is $45 at
(b.) (15 points) Refer to the above data. If the product price is $75 at
5. Question : (TCO D) A software producer has fixed costs of
$18,000 per month and her Total Variable Costs (TVC) as a function
of output Q are given below:
Q TVC Price
1,000 $15,000 $25
2,000 20,000 24
3,000 30,000 23
4,000 50,000 22

5,000 80,000 20
(a.) (15 points) If software can only be produced in the quantities
above, what should be the production level if the producer operates in
a monopolistic competitive market where the price of software at each
possible quantity is also listed above? Why? (Show all work).
(b.) (15 points) What should be the production level if fixed costs rose
to $48,000 per month? Explain.
6. Question : (TCO F)
(a.) (20 points) Suppose nominal GDP in 1999 was $200 billion, and
in 2001, it was $270 billion. The general price index in 1999 was 100
and in 2001 it was 150. Between 1999 and 2001, the real GDP rose by
what percent?
(b.) Use the following scenario to answer questions (b1) and (b2).
In a given year in the United States, the total number of residents is
270 million, the number of residents under the age of 16 is 38 million,
the number of institutionalized adults is 15 million, the number of
adults who are not looking for work is 17 million, and the number of
unemployed is 10 million.
size of the labor force in the United States for the given year?
unemployment rate in the United States for the given year?
7. Question : (TCO G and H)
(a.) (15 points) Suppose your local Congress representative suggests
that the federal government intervenes in the gasoline market to stop
runaway price increases. Would you say that this view basically

supports the Keynesian or the Monetarist school of thought? Why?
What position would the opposing school of thought take on this
issue? (Be brief -- you can answer this in 2 or 3 brief paragraphs).
(b.) (10 points) Any change in the economy’s total expenditures
would be expected to translate into a change in GDP that was larger
than the initial change in spending. This phenomenon is known as the
multiplier effect. Explain how the multiplier effect works.
(c.) (15 points) You are told that 90 cents out of every extra dollar
pumped into the economy goes toward consumption (as opposed to
saving). Estimate the GDP impact of a positive change in government
spending that equals $20 billion.
8. Question : (TCO G)
(a.) (20 points) Third National Bank is fully loaned up with reserves
of $20,000 and demand deposits equal to $100,000. The reserve ratio
is 20%. Households deposit $5,000 in currency into the bank. How
much excess reserves does the bank now have, and what is the
maximum amount of new money that can be created in the banking
system as a result of this deposit? Show all work.
(b.) (20 points) What is the discount rate in the banking system?
Explain how the Fed manipulates this rate to achieve macroeconomic
objectives.
9. Question : (TCO E and I) Let the exchange rate be defined as the
number of dollars per British pound. Assume there is a decrease in
U.S. interest rates relative to that of Britain.
(a.) (10 points) Would this event cause the demand for the dollar to
increase or decrease relative to the demand for the pound? Why?
(b.) (10 points) Has the dollar appreciated or depreciated in value

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