## Assignments

The assignments in this course are openly licensed, and are available as-is, or can be modified to suit your students’ needs. You can download the assignments (also called performance assessments) in the following formats.

## #1: Use Data to Explain Scarcity

Recommended Placement: Micro or Macroeconomics course after Scarcity

Module Alignment:

Assignment Description

In this assignment, you will demonstrate your ability to draw a simple production possibilities curve given data on the quantity of one input (labor) available and the amount of labor required to produce each of two outputs (guns and butter). You should also be able to identify the opportunity cost of one good in terms of the other as the slope of the PPC. You will explain your analysis of the figures to explain why it’s not possible to produce combinations of the two goods outside the PPC.

Suppose a nation has a total of 12 units of labor, which can be used to produce either guns or butter. One gun takes 6 units of labor to produce and 1 butter takes 2 units of labor to produce.

• Explain why scarcity exists in this economy. Use the data as evidence of your reasoning.
• What is the maximum quantity of guns that can be produced?
• What is the maximum quantity of butter than can be produced?
• Draw the nation’s production possibility curve.
• What is the opportunity cost of guns in this nation?
• Explain why the nation can’t produce both 3 guns and 4 butters.
• Explain why the nation shouldn’t produce both 1 gun and 2 butters.

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 Criteria Not Evident 0% Developing 55% Proficient 80% Distinguished 100% Weight Explain why scarcity exists in this economy, and use data to justify Calculate maximum quantity of guns that can be produced Calculate maximum quantity of butter than can be produced Draw the nation’s production possibility curve Describe the opportunity cost of guns in this nation Explain why the nation can’t produce both 3 guns and 4 butters Explain why the nation shouldn’t produce both 1 gun and 2 butters Articulation of response (citations, grammar, spelling, syntax, or organization that negatively impact readability and articulation of main ideas.) Total: 100%

## #2: Economic Model of Rational Crime

Recommended Placement: Micro or Macroeconomics course after Scarcity

Module Alignment:

Assignment Description

Create an economic model of rational crime.

For example, imagine a burglar is deciding which house to break into or a car thief is deciding which car to steal.

• Explain assumptions of rationality by individuals or firms.
• What factors would a rational criminal take into account in deciding to commit a crime? Be sure to explain how economic models are used by economists to assess the example.
• What would convince the criminal to do the deed? Explain the circumstances that would convince the criminal to do the deed. Address the concept of marginality and use your calculations of marginal changes as justification.
• What are some policy implications of your economic model of rational crime? In other words, what does your model predict would cause an increase and a decrease in crime?
• Use the distinction between positive and normative reasoning to explain the limits to using your economic model of rational crime to argue for capital punishment as punishment for burglary or car theft.

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 Criteria Not Evident 0% Developing 55% Proficient 80% Distinguished 100% Weight Explain the assumption of rationality by individuals or firms Describe the factors a rational criminal takes into account in deciding to commit a crime, and provide support with economic model examples Explain the circumstances that would convince the criminal to do the deed, and use the concept of marginality to justify Explain the policy implications of the economic model of crime, and includes the model’s prediction Explain how this model highlights the difference between positive and normative reasoning in arguing for capital punishment as punishment for burglary or car theft Articulation of response (citations, grammar, spelling, syntax, or organization that negatively impact readability and articulation of main ideas.) Total: 100%

Recommended Placement: Micro or Macroeconomics courses after Globalization, Trade, and Finance

Module Alignment:

Assignment Description

Suppose that the United States and Saudi Arabia can each produce two products, oil and personal computers.  The labor requirements per unit of output are provided in the table below.

Labor Requirements Per Unit of Output

 United States Saudi Arabia Oil 10 8 Personal Computers 30 4

Calculate the labor and opportunity costs for each good, and then compute each country’s absolute and comparative advantage.  Use the results to determine what good each country should export and explain your reasoning

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 Criteria Not Evident 0% Developing 55% Proficient 80% Distinguished 100% Weight Calculate the labor and opportunity costs for each good and country, show your work with correct notation Compute the absolute advantage each good, show your work with correct notation Explain which country has the absolute advantage in each good and justify Compute comparative advantage for each good, show you work with correct notation Explain which country has the comparative advantage for each good and justify Describe what good each country should export and justify Articulation of response (citations, grammar, spelling, syntax, or organization that negatively impact readability and articulation of main ideas.) Total: 100%

## #4: Price Controls after an Ice Storm

Recommended Placement: Micro or Macroeconomics course after Surplus

Module Alignment:

• Explicitly addresses Supply and Demand and Government Action

Assignment Description

In 2014, a major ice storm hit the southeastern U.S..  The storm brought down power lines and trees, cutting electricity in many areas, making travel difficult, and slowing down repair crews.  Heating homes became a major challenge.  The storm created shortages of power generators.  As a result, those products sold at prices much higher than normal.  These high prices provoked cries of “price gouging” and calls on the government to impose price controls to prevent gouging.  While no one likes to pay a higher price than normal for something, consider what would have happened with a price ceiling.  The economic intuition is revealing.

Draw a diagram showing the market for generators with an equilibrium price at $250. Now impose a price ceiling at$200 per generator.  What would be the impact of the price ceiling on the quantity demanded?  On the quantity supplied?  Who would benefit from the price ceiling and who would be harmed?  Let the graph guide your thinking.  Don’t start with your gut reaction!  Did the price ceiling help the people it was designed to help?  Explain the economic reasoning behind your analysis.

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 Criteria Not Evident 0% Developing 55% Proficient 80% Distinguished 100% Weight Analyze the consequences of the government setting a price ceiling Graphically calculate a market’s equilibrium price and quantity Graphically illustrate a market shortage Calculate the impact of government regulations on price and quantity of a product produced Articulation of response (citations, grammar, spelling, syntax, or organization that negatively impact readability and articulation of main ideas.) Total: 100%

## #5: State of the Macro Economy

Recommended Placement: Macroeconomics course after Macroeconomic Measures of Performance

Module Alignment:

• Explicitly addresses Macroeconomic Measures of Performance

Assignment Description

This table shows U.S. economic indicators for a five-year period.  All variables are measured in percent.

U.S. Economic Indicators for a Five Year Period

 GDP Growth Inflation Unemployment 2.5 2.1 5.6 3.7 1.9 5.4 4.5 1.8 4.9 4.4 1.1 4.5 4.8 1.5 4.2

How would you characterize the state of the economy over this time period and especially in the final year shown.  What do you expect will happen in subsequent years?  Please explain your reasoning in detail.

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 Criteria Not Evident 0% Developing 55% Proficient 80% Distinguished 100% Weight Assess the state of the economy based on the data for the GDP Growth indicator Assess the state of the economy based on the data for the Inflation indicator Assess the state of the economy based on the data for the Unemployment indicator Predict what will happen in subsequent years based on the data for all three indicators Articulation of response (citations, grammar, spelling, syntax, or organization that negatively impact readability and articulation of main ideas.) Total: 100%

## #6: Analysis of a Demand/Supply Shock using AD/AS

Recommended Placement: Macroeconomics course after Policy Application

Module Alignment:

• Implicitly addresses Neoclassical and Keynesian Economics, Fiscal Policy, Monetary Policy, Policy Application

Assignment Description

In 2014, China’s economy slowed significantly causing a decrease in demand for US exports.

Use the AD/AS model to explain the likely short run impacts on US GDP and the aggregate price level.  What do you anticipate will happen to US consumption expenditure and US employment?  Please explain your reasoning for each of your predictions and show graphically as appropriate.

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 Criteria Not Evident 0% Developing 55% Proficient 80% Distinguished 100% Weight Explain the likely short run impacts on US GDP using the AD/AS model Explain the likely aggregate price level use the AD/AS model Create a graphic to illustrate the anticipated result to US consumption expenditure and US employment Explain the anticipated result to US consumption expenditure and US employment Articulation of response (citations, grammar, spelling, syntax, or organization that negatively impact readability and articulation of main ideas.) Total: 100%

## #7: Policy Response to a Macro Shock

Recommended Placement: Macroeconomics course after Policy Application

Module Alignment: