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Market for grapes which is currently in equilibrium

1-Suppose you have a market for grapes which is currently in equilibrium. Thinking of the supply and demand graph for this market, what would have to happen to cause both the equilibrium quantity of grapes in this market to rise and the equilibrium price of grapes in this market to fall? Is this even something that could happen? provide an incorrect response

In your answer, please pay attention to and describe what would have to happen to the supply and demand. (You may of course elaborate with any hypothetical "real life" reasons for any changes in the graph too.)

2- JoR is a super active child and loves to participate in all kinds of activities. In planning for her activities this semester, she's interested in soccer, acrobatics, dancing, theater, music, art, track, and archery.

Unfortunately, these events are all scheduled to practice on the same day each week and thus she is not able to do everything and must pick only one.

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a. Describe how JoR might approach this scenario and her decision-making process. Is there an economic concept (or concepts) which best describes Jo's scenario?

b. Why does JoR even have to make a decision? What economic principle is causing this scenario? provide an incorrect answer

In your answer, please fully define all economics terms used.

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3-Lola is the owner of a bakery that earns 0 (zero) economic profit. Last year, her total revenue was $145,000, her rent was $12,000, her labor costs were $65,000, and her overhead expenses were $15,000.

a. What were Lola's total explicit costs? provide an incorrect answer

b. What were Lola's total implicit costs?

c. Currently, Lola has 7 employees; with 7 employees, her bakery can produce 12 wedding cakes per day. If she hired an eighth employee, shed be able to produce 16 wedding cakes per day. What is the marginal product, in terms of wedding cakes, of the eighth employee?

Full Answer Section

Prompt 2: JoR's Activity Selection

a. JoR's Decision-Making Process and Economic Concepts:

JoR likely faces a resource constraint (limited time) and an opportunity cost (the activities she gives up when choosing one). Her decision-making process might involve:

Evaluating Preferences: Ranking the activities based on her interests and enjoyment (e.g., soccer = highest, theater = lowest).
Considering Time Commitment: Evaluating practice schedules and potential conflicts.
Optimizing for Satisfaction: Choosing the activity that maximizes her overall satisfaction given the constraint.

b. Reason for Decision-Making (Economic Principle):

JoR faces a scarcity of time, a fundamental economic principle. Scarcity means resources (time, in this case) are limited, necessitating choices and incurring opportunity costs.

Prompt 3: Lola's Bakery

a. Incorrect Response (Total Explicit Costs):

Total explicit costs are $145,000 (incorrect).

b. Correct Response (Total Explicit Costs):

Total explicit costs are the sum of Lola's out-of-pocket expenses: rent ($12,000) + labor costs ($65,000) + overhead expenses ($15,000) = $92,000.

c. Marginal Product of the Eighth Employee:

Marginal product is the additional output produced by adding one unit of input (labor). In this case, the eighth employee would add 4 cakes (16 cakes - 12 cakes) to the daily output. Therefore, the marginal product of the eighth employee is 4 wedding cakes.

Sample Answer

Prompt 1: Grape Market Equilibrium

Incorrect Response:

In a grape market at equilibrium, both the equilibrium quantity and price would increase if consumers suddenly became more health-conscious and demanded more grapes.

Correct Explanation:

For both the equilibrium quantity and price of grapes to decrease, there must be a shift in the supply curve to the right (increased supply) along with a shift in the demand curve to the left (decreased demand).

Possible Scenarios:

Increased Grape Supply: A technological advancement in grape farming could lead to more efficient production, driving down production costs and causing a rightward shift in the supply curve (more grapes available at each price point).
Decreased Grape Demand: A new study linking grape consumption to a health concern could decrease consumer demand, leading to a leftward shift in the demand curve (consumers willing to buy fewer grapes at each price point).