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Problem Set 1 (Econ210)

The document is a problem set for an Economics course, focusing on principles of economics, including direct and inverse relationships between variables. It contains various questions related to graph analysis, linear equations, marginal costs and benefits, definitions of economic terms, and multiple-choice questions on microeconomics concepts. The problems are designed to test students' understanding of fundamental economic principles and their applications.

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23 views6 pages

Problem Set 1 (Econ210)

The document is a problem set for an Economics course, focusing on principles of economics, including direct and inverse relationships between variables. It contains various questions related to graph analysis, linear equations, marginal costs and benefits, definitions of economic terms, and multiple-choice questions on microeconomics concepts. The problems are designed to test students' understanding of fundamental economic principles and their applications.

Uploaded by

talhayurt2001
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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METU

Department of Economics
Econ 210: Principles of Economics
Section All
Fall 2022-2023
Problem Set I

TOOLKIT

Direct and Inverse Relationships


Direct Relationship: This is where two variables do the same thing. If one
increases, the other increases. If one decreases, the other decreases.
Inverse Relationship: This is where two variables do the opposite thing. If
one increases, the other decreases.
PART A: PROBLEMS

Q1: For the graphs below, indicate the ones that are

a) increasing for all x,


b) decreasing for all x,
c) increasing at a constant rate for all x,
d) decreasing at a constant rate for all x,
e) increasing at an increasing rate for all x,
f) increasing at a decreasing rate for all x,
g) decreasing at an increasing rate for all x,
h) decreasing at a decreasing rate for all x.

Q2: Write linear equations with x as the independent variable and y as the
dependent variable based on the following information:
a) Slope of the line is 3 and y-intercept is 7.
b) Slope of the line -5 and y-intercept is 0.
c) Slope of the line is 7 and passes through point (1, 1)
Q3: For each of the following situations involving marginal cost (MC) and
marginal benefit (MB), indicate whether it would be best to produce more,
fewer, or the current number of units.
i. 3,000 units at which 𝑀𝐶 = $10 and 𝑀𝐵 = $13.
ii. 11 units at which 𝑀𝐶 = $4 and 𝑀𝐵 = $3.
iii. 43,277 units at which 𝑀𝐶 = $99and MB = $99.
iv. 82 units at which 𝑀𝐶 < 𝑀𝐵.
v. 5 units at which 𝑀𝐵 < 𝑀𝐶.

Q4: Define the following terms:

a. Economics
b. Microeconomics and Macroeconomics
c. Opportunity cost
d. Marginal Cost/Benefit
e. Sunk Cost
f. Market Force
g. Positive and Normative Economics
h. Invisible hand Theorem

Q5: Write down the equation of the line passes through the point (1, 1) and
parallel to the graph of 6x-3y+4=0.
PART B: MULTIPLE CHOICES

Q1: Microeconomics is the study of


A) how households and firms make choices.
B) the economy as a whole.
C) the global economy.
D) topics such as unemployment, inflation, and economic growth.

Q2: The concept of scarcity implies ________.


a) Unlimited human resources and limited producer wants
b) Unlimited human wants and limited resources
c) Limited human wants and unlimited resources
d) That we can have everything we want

Q3: If the equation 𝑦 = 3𝑥 + 9 was plotted:


a. the vertical intercept would be 9.
b. the slope would be 3.
c. it would look like an upward sloping line.
d. the horizontal intercept would be – 3.
e. all of the above would be true.

Q4: Assume a household would consume $150 worth of goods and


services per week if its weekly income were zero and would spend an
additional $80 per week for each $100 additional income. Letting 𝐶
represent consumption and 𝑌 represent income, the equation that
summarizes this relationship is:

a. 𝐶 = 150 + 80𝑌
b. 𝐶 = 80 + 1.5𝑌
c. 𝐶 = 80 + 150𝑌
d. 𝐶 = 150 + 0.8𝑌
e. 𝐶 = 100 + 0.8𝑌
Q5: If price (𝑃) and quantity (𝑄) are directly related, this means that:
a. a change in 𝑄 will alter 𝑃, but a change in 𝑃 will not alter 𝑄.
b. if 𝑃 increases, 𝑄 will decrease.
c. if 𝑃 increases, 𝑄 will also increase.
d. an increase in 𝑃 will cause 𝑄 to change, but the direction in which 𝑄
changes cannot be predicted.

Q6: In the figure, the point where the 𝑠𝑙𝑜𝑝𝑒 = 0 is

a. A
b. B
c. C
d. D
e. E

Q7: Refer to the figure. The movement from line A to line B


(parallel lines) represents a change in:

a. The slope only


b. The intercept only
c. Both the slope and the intercept
d. Neither the slope nor the intercept

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