Alexander Taseski

ECON100 QUIZ-

Q1- It appears Hannah has absolute advantage over Sam only for bracelets, whereas Sam has
one over Hannah for necklaces. All this means is that each person has advantage to produce
more of that good.

b) Opportunity cost the highest valued alternative, for making bracelets on behalf of Sam he
must forego the ability to make 32 necklaces to make 16 bracelets. For Hannah she must
forego 24 necklaces to make 18 bracelets.

Hannah to devote half her time, to make 12 necklaces and 9 bracelets. She can make 1
bracelet for every 1.333 necklaces. Lower opportunity cost to make bracelets.

Sam would be making 16 necklaces and 8 bracelets, making his cost 1 bracelets for two
necklaces. Sam has lower cost to make necklaces.

c) For Sam to make two necklaces he must forego only one bracelet, for Hannah she will only
gain 1.333 necklaces for one bracelet.

d) Sam has the comparative advantage at making necklaces over Hannah. If they produced
half of their capacities their output would be 45 units, however if Sam produces just
necklaces and Hannah just bracelets, they collectively make 60 units.

Hannah has it over Sam in making bracelets as she only forgoes 1.333 necklaces to make one
bracelet.

2. Factor or product market, are households or firms supplying it or demanding it.

a) Households are demanding SUV, firms are supplying them and it is product market
b) Tesla increasing employment is a factor market, households are supplying labour while
Tesla creates demand.
c) George working is a factor market; he supplies his labour while McDonalds demands his
labour.
d) George selling land to McDonalds is, factor market as the household is supplying and
McDonalds is demanding.

3. Increased production leads to lower price, which in turn then leads to increasing demand…

Could the firm increased production, from a technological change… produce more output
using same inputs. If this is so, the cost to produce is cheaper and the firm will increase
supply, shifting to the right. However, increased production does not lead to lower price,
price can only change quantity supplied, the curve must be shifted by something other the
n price.

The first part, increased production leads to lower price is not necessarily true. The law of
supply states that as prices increase the quantity supplied will too. Lower prices do increase
demand but, in this case, I believe the only price change has occurred from a new equilibrium
price as the supply curve has shifted to the right. The quantity will increase, however the
demand curve will remain the same based on the facts given, only moving along the demand
curve(quantity demanded) not moving the actual curve.
Alexander Taseski

Quiz 3:
PT A CH13- GDP only accounts for final goods and services, the stock purchases would not
count as a final good or service therefore would not contribute to GDP. However broadly
speaking if people are buying shares usually the market is in a booming period which would
increase consumer spending.

B- Increase GDP or reduce it

i) Women working paid jobs outside house would naturally increase GDP as they
would use disposal income on goods and services.
ii) Crime rate increase would mean more GDP is lost in the underground economy which
means measured GDP would be reduced until adding the underground economy on top of it.
iii) Avoiding tax is illegal action, it gets tricky whether it is evasion or avoidance.
Hiding extra income does not reduce GDP, as that hidden extra income usually in
cash form will be used to buy more goods anyway. It only reduces GDP measured
if the cash income earned by someone else is not declared also.

PT B CH14-

Employed, unemployed or not in force.

i) Employed? Or just volunteer…
ii)Employed
iii)Discouraged worker, out of force
iv)unemployed
v)out of force

Quiz 4:

1. Australia’s currency is a suitable medium of exchange because, sellers are

willing and able to accept it to trade for good or services. For example giving
the shoe maker 100$ for one pair, then he with that $100 can exchange it for
good/service he needs. It makes it an efficient single good.
2. It is agreed that labour/human capital and capital stock determines long run
supply. This is because price level does not effect long run curve, and price
level cannot change labour and capital stock. Inflation does not effect long run
supply rather it effects short run supply.
3. No, the long run supply curve did not shift to the left, the short run supply
curve perhaps when prices of goods rise prices of inputs rise more slowly.
However aggregate demand can decrease from lower expectancy in wages due
to pandemic, our domestic GDP growth rate may have slowed versus
international counterparts which also in the short run pushes curve left. The
LRAS shifts right as per increase in workers, production and or technology
imporvments the pandemic would not have pushed the long run curve right.
4. I) true
ii) True, or is it only rising real gdp that does this.
iii) RBA sells securities it reduces bank liquidity, which raises interest rates.
When interest rates rise the dollar will rise as it attracts foreign investors.