economic study on how we can Page - 1- ADDIS ABABA UNIVERSITY, FACULTY OF SCIENCE Departme, Exercises of Economics

Download economic study on how we can Page - 1- ADDIS ABABA UNIVERSITY, FACULTY OF SCIENCE Departme and more Exercises Economics in PDF only on Docsity! ECON 205 -- In Class Assignment 1 (10%) - 3 Team 3 1. "Rent control laws in Chicago should be abolished as they will cause society to be worse off" a) Is this a hypothesis? (1 mark) Explain why or why not? (2 marks) Answer) This is not a hypothesis, because it is describing people’s behavior to a change in the economic circumstance b) Is this an example of Positive Analysis or Normative Analysis? (1 Mark) Explain why. (2 Marks) this is a Normative Analysis, because the statement is not fact proven and its made based on value judgment. 2. Labour Revenue Costs Profit (NB) Marginal Marginal Marginal Benefit Cost Net Benefit 0 0 0 0 0 0 0 1 250 100 150 250 100 150 2 450 200 250 200 100 100 3 550 300 250 100 100 0 4 600 400 200 50 100 -50 a) Fill in the empty boxes. (5 Marks) b) How many workers will this factory hire to maximize profits? (1 Mark) Answer) This factory needs to hire 1 worker, because the Marginal Net Benefit is higher 3.Bisque is a smooth, creamy, highly seasoned soup of French origin, classically based on a strained broth (coulis) of crustaceans. It can be made from lobster, langoustine, crab, shrimp, or crayfish. It is high-quality, high-priced and delicious. A) Interms of the economic concepts discussed in this course so far, is bisque a normal good or an inferior good? (1 Mark) Explain why or why not. (2 Marks) Answer) Its normal good because its high-quality product which means people need to have a high income to buy it. Therefore, if income increase the demand for this product is going to increase.