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2/5/2020
Week 5 Q/A

Types of Assessments Descriptions

Type 1 Type 2 Type 3
Type 1 items are about the Type 2 items are about the Type 3 items are weekly
basic details and processes more complex ideas and exams that begins in the
students should understand processes students should second week. These exams
and be able to do if they were understand and be able to do will require you to show your
paying attention in class. if they were paying attention ability and understanding of
in class. simple and complex details
and process taught in class.

Assessment of Topic 1: What Scarcity is About

Type 1 Type 2 Type 3
1. Provide a brief explanation 1.1. What does the term
for each of the following “scarcity mean? What
terms: does Professor Egwaoje
1.1. Economics mean by defining
1.2. Scarcity scarcity as “the fact that
1.3. Incentives there aren’t enough
1.4. Ceteris Paribus resources available to
1.5. Efficiency satisfy all our desires?
1.6. Opportunity cost 1.1.1. It means that in any
sector of the economy, all
our haves (resources, such as
land, labor, capital, and
entrepreneurial ability) are
less than all our desires
(wants).

1.2. How important is the

distinction between the
amount of money in
people’s pocket and the
resources available for
producing goods and
services?

1.1.1. The distinction

between the amount
of money in people’s
pocket and the
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resources available
for producing goods
and services is
important because the
limits in the amount
of money in people’s
pockets and the limits
in the output of the
entire economy are
set by the resources
available.

Assessment of Topic 2: Production Possibilities and Economic Growth

1. Name the key points 3.1. What does Figure 2 seem No Examination
delineating the production to say about the production
possibilities frontier (PPF). possibilities curve (PPF)?
Why do you think the
illustrator included the
alphabets in the figure? In a
couple of paragraphs, please
evaluate this graph’s
effectiveness.

3.1.1. Figure 2 seems to

illustrate three essential
principles: (1) scarce
resources meaning that
there’s a limit to the amount
of output we can produce in a
given time period with
available resources and
technology. (2) Opportunity
costs meaning we can obtain
additional quantities of any
particular good only by
reducing the potential
production of another good.
(3) Figure 2 seem to say that
the PPF shows potential
output, not actual output.
The illustrator included the
alphabets in the figure to
indicate that every point on
the production possibilities
curve is efficient. To indicate
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with the letter i that we’re

inefficient because actual
output is less than potential
output. To indicate with the
letter h that our desire to
produce more than our
potential, although desirable,
but not attainable.
This photo (Figure 2) is a
simplified representation of
the real world, since it is
impossible to represent all
the events of the real world
graphically. Nevertheless, to
make this photo effective (to
better understand it and use it
to improve lives) it needs in
addition to nonlinguistic
descriptors, it needs
linguistic descriptors. For
example, we are inefficient at
point i because we are either
utilizing resources
inefficiently or not using all
available resources.

3.2. Explain the following

analogy:
3.2.1. The PPF that bows out
of the origin is to nonlinear
function as the PPF that is
straight is to linear function.
3.2.2. The PPF that bows out
of the origin is nonlinear
because the slope is not
constant across the curve,
while the slope of the linear
curve is constant all through
the curve.
Generally, both elements
relate to the same thing,
which is a slope.

.
Assessment of Topic 3: Market Equilibrium
1. If S(p) = -2000 + 3000p Price, p (in Quantity No Examination
dollars) X- Demanded, q:

and D(p) = 10,000 – 1000p
represent the quantity
supplied and the quantity
demanded of hot dogs at a
baseball game.
1.1. What is the equilibrium
price? $3
2.1. What is the equilibrium
quantity? 7000
3.1. At what price will
nothing be offered for sale?
$0.67
4.1. At what price will
nothing be demanded? $10
2. If income increases, what
will happen to
2.1. the demand for normal
goods? Demand will increase
2.2. the price of the good?
The price of the good will
remain unchanged.
2.3. the equilibrium price of
the good?
The equilibrium price will
increase.
Assessment of Topic 4: Market Failure
4.1. The best definition of
market failure is
A. Producing too much of a
good thing.
B. Producing too little of a
good thing.
C. Producing more than the
optimum amount of a good
thing.
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Axis Y-Axis
150 100
200 80
250 60
300 40
1. Plot the ordered pairs (p,
q) in a Cartesian plane.
1.1. Read chapters 1
appendix and chapter 3
to see how ordered pairs
are plotted.
2. Show that quantity
demanded q is a linear
function of the price p.
Q = -0.4p + b
3. Determine the linear
function that describes the
relation between p and q.
Q = -0.4p + 160
4. Graph the linear function
in the Cartesian plane drawn
in part (a).
5. Interpret the slope.
The slope is -0.4. As price
changes by $1, the quantity
demanded changes by 0.4
6. Interpret the values of the
intercepts.
The x-intercept of 400 means
that the quantity demanded is
zero.
4.1. How a dramatic decrease No Examination
in private property rights is
an example of the principle
of market failure? Explain.
A decrease in private
property rights will result in
lower cost and an increase in
supply of the goods that
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D. Producing a good thing up pollute the air. A decrease in

to the point where marginal private property rights will
benefit equal marginal cost. decreases demand for such
services as education.

4.2. What does it mean to

you that the nature of market
failure is to overallocate
resources (suboptimal),
underallocate resources
(suboptimal) or not allocate
any resources (suboptimal) to
the production of a good or
service?

4.2.1. Overallocate resources

to the production of a good
or service because some cost
is not paid for. Underallocate
resources to the production
of a good or service mean
that the total benefit is not
captured by the individual.
Not allocating any resources
to the production of a good
means that the good is
neither characterized by
rivalry and excludability.
What in your view do the
three identified nature of
market failure lead to? Why?
The overallocation of
resources will lead to the
production of too much of a
bad thing, such as air
pollution, and negative
externalities because others
will be impacted negatively
with no impact in production
cost. Underallocation of
resources will lead to too
little production of a good
thing, such as education, and
positive externalities because
others will positively be
impacted by the educated
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without paying the educated

for the benefits they received.

4.3. Compare the principle of

supply and demand with the
principle of market failure.
Supply is to low input price
as market failure is to
overallocation of resource.
On an abstract or general
level, as input prices fall,
supply increases. As more
people are harmed due to air
pollution without the
perpetrator held accountable,
supply will increase.
On the other hand, market
failure, such as too little
education demanded is to
spillover benefit without
payment leading to decrease
in demand for education.

Describe specific ways in

which they are similar and
specific ways in which they
are different.

Market failure and demand

and supply are similar
because both elements are
schedules of curves showing
the relationship between two
variables.
They are different because
demand and supply are the
results of market failure.
Then describe one or more
conclusions your analysis
leads you to and defend those
conclusions.
One conclusion is that
market failure is self-interest
because if the producers are
unable to exclude those who
have not paid for the good or
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service from benefitting the

producers will produce too
little or not at all. Finally, the
producers will produce too
much of a bad thing if their
profit is enhanced due to
their use of resources, such
as taking clean air and giving
back bad air without payment
to the victims suffering from
air pollution.