Appraisal statements should being with TRUE or FALSE.

1.
In order to promote more exercise among teens and young adults, suppose that a new, national public health campaign using social media is very successful in motivation this population to actively pursue gym memberships.

a.
Appraise this statement: The public health campaign will result in decreased prices of gym membership as well as decreased quantity of teens and young adults buying memberships.

b.
Now suppose that the supply of gym facilities increases dramatically as a result of new tax incentives. Putting you answer to part (a) together with this new phenomenon (supply increases), what will the combined impact be on price and quantity of gym memberships? Will price and quantity go up, down, or can we not be sure?

2.
Suppose that Ralph’s income is \$175,000 per year. He can spend it on healthcare visits (V) or on all other goods (OG). The price per V is \$500, and the price per OG is \$100.

a.
Draw Ralph’s budget constraint (put V on the horizontal and OG on the vertical axis). Using an indifference curve, show Ralph’s optimum if he buys 1,600 OG per year. Show values of all intercepts and points of interest.

b.
Suppose that the price per OG increases to \$150, and that as a result Ralph reduces his consumption of OG to 1,500. Draw the new budget constraint and indifference curve. Show values of all intercepts and points of interest.

c.
What is Benjamin’s price elasticity of demand for OG?

3.
Please answer this question in one brief paragraph of only 3-5 sentences (Warning: if you write more than that, then you risk having points deducted.) NO GRAPHS required for this question. Consider the following: There are only 365 days in a year. When Jill works, she earns income. When Jill plays, she does not earns income, but she really enjoys herself. Sometimes Jill is sick, and can neither work nor play. Jill wants to be healthy, too. Appraise this statement: The problem is, since there are only 365 days in a year, if Jill spends time investing in her health. Such as by exercising, then she will have to sacrifice both income and play time. Thus, if she wants to earn a good income and also to enjoy leisure, then investing in her health can only be considered a waste of time.