Q1. Compute the percentage changes for the following (enter your responses as integers):

(3 Marks) [Ch. 1]

Initial Value

New Value

Percentage Change

100

112

50

54.0

10

12.5

Q2. Maps are a good non-economic example of using assumptions to make things simpler. Which of the following are assumptions used to make maps useful?

(2 Marks) [Ch. 1]

Q3. Consider a student studying for a biology exam. Would you expect study time to be subject to diminishing returns? Suppose productivity is measured as the anticipated increase in the exam score. Construct a numerical example in which the first hour is twice as productive as the second hour, which is twice as productive as the third hour, and so on up to five hours of study. (2 Marks) [Ch. 2]

Q4. If the florist below shows the marginal benefit that a florist earns from keeping his store open one more hour. The florist has a marginal cost of &70 per hour. For the last five weeks he has stayed open 24 hours.

Hours

Marginal Benefit per Hour

18

100

19

80

20

70

21

60

22

30

23

20

24

10

a. Do you think the florist’s decision to stay open 24 hours is optimal? Why?

(1.5 Marks) [Ch. 2]

b. How many hours do you advise him to stay open? Why? (1.5 Marks) [Ch. 2]

Q5. If the demand and supply curves for boxes are: D = 100 – 8P and S = 22 + 4P, where P is the price of boxes.

a. Does the law of supply apply for the market of boxes? Why? (3 Marks)

b. Calculate the equilibrium quantity and price? (2 Marks)

[Ch. 3]

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