Economics Homework Thirteen Answers - Student Twelve

Zachary C.

2\. Some politicians complain about how people are losing their jobs to workers in China. Is this problem the result of "free trade" or "protectionism"?

This is a result of free trade. Most goods produced in China are cheaper to make and sell, than they are in the United States. Thus, many production based jobs are proformed by the Chinese, and their products are imported to the United States.

Right. ("performed", not "proformed")

3\. What is one of the primary responsibilities of the Federal Reserve Bank?

The Federal Reserve is responsible for setting the interest rate around the country.

Correct, and note that it is the same interest rate nationwide (I think that is what you meant.)

4\. Review: Suppose that after completing this course, you start a new company. In your first year, you "broke even" (had zero profits), and in your second year you want to increase your revenue and profits. After careful study of your market, you decide that you can increase your revenue by increasing your price. Therefore, your good must be price elastic/inelastic (choose one).

The price must be inelastic.

Correct!

5\. A monopolistic competitive firm has the following characteristic that is lacking for a perfectly competitive firm:

(c) P > MC

The monopolistic company can set his price so that it exceeds marginal cost.

Correct again!

6\. You can go on www.orbitz.com and watch the price of airline tickets change from day-to-day. If you pick fixed dates of travel, such as Jan. 15 to fly somewhere and Jan. 18 to return, then you will notice that the closer you get to those dates, the higher the price of the ticket usually is. In other words, the earlier in advance that you can buy a ticket, the cheaper it usually is. Explain how this illustrates a basic difference between long run and short run costs.

Ordering the tickets far in advance provides the airline company with advanced notification. This is helpful to the airline company because they have money in advance and therefor provide incentive to consumers to purchace the tickets early.

Excellent. (note spelling corrections: therefore, purchase)

Strong finish to your homework. Next, a strong finish in preparing for the final exam in this course could enable you to pass the CLEP also for college credit. 50/50. Congratulations!--Andy Schlafly 11:29, 20 December 2009 (EST)