Hello AP Econ Students!

- Your summer assignment is posted on:

marcouxhistory.wordpress.com o With your mouse, hover over the “AP Macroeconomics S.1” dropdown and click on

“Introductory Materials.” On that page you will see a link that says “AP Economics Summer assignment” Click on that, PRINT OUT THE ANSWER KEY ONLY (LAST THREE PAGES), and complete it. It will be due the first day class.

- This website will be used the entire year for you. Get familiar with it, bookmark it.

- If you lose this piece of paper, the website is posted on my CHS page as well as the

assignment, which will be posted on the library summer assignment page. Hello AP Econ Students!

- Your summer assignment is posted on:

marcouxhistory.wordpress.com o With your mouse, hover over the “AP Macroeconomics S.1” dropdown and click on

“Introductory Materials.” On that page you will see a link that says “AP Economics Summer assignment” Click on that, PRINT OUT THE ANSWER KEY ONLY (LAST THREE PAGES), and complete it. It will be due the first day class.

- This website will be used the entire year for you. Get familiar with it, bookmark it.

- If you lose this piece of paper, the website is posted on my CHS page as well as the

assignment, which will be posted on the library summer assignment page.

Name: Date: Period: AP Economics Summer Assignment: DUE THE FIRST DAY OF CLASS

YOU MUST READ THIS: AP Economics is unlike any other course offered in the Social Studies department. There is little source reading and very little writing you will have to do, however there are certain skills students must have to be successful in AP Economics:

1. Develop a strong work ethic 2. Use common sense 3. Find ability to synthesize language and figure out problems with incomplete information (I call

this “backing into a solution.”) 4. Having logic 5. Thinking rationally

This summer assignment will count as a quiz grade and doesn’t have much to do with complex economic theory – this will be taught to you next school year. Rather, this assignment tests your ability to use reason and logic to come to a solution. You will need skills 1 – 5 listed above. At its core, economics is 50% common sense. You need to have a logical and focused mind to do well in the course. Unlike other history courses where you write argumentative essays and are awarded points based on how convincing you are, this skill is less valuable as all problems only have one right answer. While you certainly need to read closely through the problems (which can sometimes be the hardest part of economics) you will never to convince a reader that your position is right because, again, every answer has one correct, and several incorrect solutions. This assignment is nothing more than a series of logic problems, some use economic concepts, but all use the skills you need to do well in the course. While some problems can be frustrating, they all have a solution; here is my advise to you:

1. Read the questions carefully! – This is something that is invaluable when solving problems in this course.

2. Determine what information is useful and irrelevant (if there is any). 3. Do not argue why you are right – this will serve absolutely no benefit to you. 4. All questions have a right answer. If you’re thinking: “This can go either way” – it can’t. 5. Use logic (and reason, and common sense) to solve these problems. 6. Only use the language and information in the problem to solve the problem. (For example, in

the first problem, you should NOT be thinking: “She should fly another airline at a cheaper price.” That’s not working within the problem to solve it – you will not get any problems correct if that is your approach.)

7. If a problem asks you to explain an answer, only use 1 – 2 sentences to do so. 8. Don’t do this all in one day – your brain needs rest time.

Good Luck!

1. Sophia must go to both Chicago and China. Delta Airlines sends her two coupons, of which she can only use one: $90 off a $200 flight to Chicago and $100 off a $2,500 flight to China. On what flight should she use her coupon? Explain.

2. Person A is looking at Person B, but Person B is looking at Person C. Person A is a boy, but Person C is a girl. Is a boy looking at a girl? Circle one of the following answers below:

A. Yes

B. No

C. Insufficient information to determine

3. Jim paid $70 (non-refundable) for an all you can eat brunch at a 5 star restaurant overlooking

the Manhattan skyline. After only eating the equivalent of $32 worth of food, Jim is uncomfortably full. Jim also has a full day of sight seeing in front of him and does not want to eat anymore. Last week, Jim also spent $25 dollars on a non-refundable cell phone case sold on a suspicious website that does not even fit his phone. Should Jim consume more to get his monies worth at this restaurant? Explain.

4. On August 30th, 2016, Jack and Jill spent their day at the Red Bull Flutag, where contestants build homemade flying apparatuses to see who can soar the longest distance. There were three participants in the Flutag: Dan, Stan, and Fran. Jack said, “Dan won the Flutag and Stan came in second.” Jill, however, claimed, “Fran won the Flutag and Dan came in second.” In reality, neither Jack’s nor Jill’s reporting of the results was fully true. Each of them said one correct statement and one false statement. What was the actual placing of the three contestants?

1st Place: ____________________ 2nd Place: ____________________ 3rd Place: ____________________

5. This summer, you decide to get a job at a clothing retail business. On Monday, your boss gives you three boxes to sort through; one says “pants,” one says “shirts,” and one says “pants and shirts.” However, your boss tells you that none of the boxes are labeled correctly. He demands that you correctly label each box by only opening one of the boxes and taking (and looking) at just one piece of clothing from just one box. Explain how this can be done. (This answer needs to be longer than just 1 – 2 sentences.)

6. Jake needs one more class to fill in on his packed schedule and needs one more social studies

class to graduate Conard High School. Jake signs up for AP U.S. History and is given seven chapters that are 80 pages each to do over his summer vacation. Additionally, he has to respond to 50 short answer questions for each chapter. Jake spends 8 hours a day, every day over the summer on this assignment and turns it in on the first day of class. However, he hears clamoring amongst his peers about how incredibly “lit,” or “litty,” AP Economics is. Some have been quoted, saying that it is, “the illest,” and/or “poppin’.” Others have said that it is “A-1.” While many have said that it is, “fire,” and/or “type craze.” Jake realizes this and has made the decision that AP Economics is definitely the social studies course he wants to take, but to do this he would have to drop AP U.S. History to take the course. Since Mr. Marcoux is a merciless teacher (and a bit “extra” and/or “O.D.” at times), he also is making Jake complete the AP Econ summer assignment and not giving him credit for the work he did for APUSH over the summer. Luckily, this doesn’t faze Jake and he’d still prefer AP Econ to APUSH. Should Jake drop AP U.S. History to take AP Economics? Explain.

7. Mr. Marcoux received 5 packets of summer work from 5 different students. Each of the packets had identical right answers and identical wrong answers – he knew one of the 5 students must have passed around their work to the others and he wanted to find the culprit. He interrogated the 5 students and below are their responses. The statements below are what each of the suspects said; it turns out that exactly 5 of these statements were true. Who was the student to pass their work around?

o Phil said: ! “It wasn’t Terry.” ! “It was Courtney.”

o Terry said: ! “It wasn’t Phil.” ! “It was Derek.”

o Courtney Said: ! “It wasn’t Derek.” ! “It wasn’t Terry.”

o Derek Said: ! “It wasn’t Jessica.” ! “It was Phil.”

o Jessica Said: ! “It wasn’t Courtney.” ! “It was Derek.”

8. Jack and Jill went back to the Red Bull Flutag on July 2nd, 2017. At this Flutag, four

contestants entered the majestic homemade flying contest. Because Jack and Jill are not very transparent, they tell you about the race, but leave some the details blank. Here’s what you know:

a. Alison came in first place b. The contestant wearing the number 2 wore red c. Jason did not wear yellow d. The loser wore blue e. Seth wore number 1 f. Kelly beat Seth g. The person who came in second place wore number 3 h. The contestant in yellow beat the contestant in green i. Only one of the contestants wore the same number as their final position

Based on this information, determine who finished where as well as the number and color they wore.

Place/Standing: Name: Color: Number Worn:

9. Wendall helps out his buddy, Tony, at a barbershop when the shop is busy. When he is free, Wendall typically jumps at the chance to make some extra side money, but sometimes he doesn’t take him up on the offer. Tony calls him up and said he could use Wendall’s help from 10am to 2pm on Saturday, earning $15 per hour. His other friend, Gia, offered him a total of $90 to help her move from 9am to 2pm this coming Saturday. Wendall tried to negotiate an hourly rate from Gia, but she said it was all or nothing and wasn’t budging on the hours. Wendall had a big decision to make. He pondered over it with some General Tso’s chicken and fried wontons Friday night that cost him $15 (plus a $3 delivery tip), which was his usual routine on Fridays. Overnight, an early winter storm dumped 4 feet of snow in the mountains near his home on Friday into Saturday, so Wendall paid $70 for a lift ticket and shredded some fresh powder all day on Saturday instead of either working at the barbershop or helping his friend move. Given his other opportunities, what was the true cost (in terms of dollars) of Wendall’s decision to snowboard?

10. If John’s son is my son’s father, what am I to John? Circle the correct response.

a. Grandfather

b. Father

c. Son

d. Grandson

e. I am John

11. If it takes 5 machines 5 minutes to make 5 t-shirts, how long would it take 100 machines to make100 t-shirts?

12. A young man is traveling to Paris with his panther and two ducks. The panther likes the taste

of ducks a lot… and that means if the man leaves the panther alone with a duck, the panther will eat them. They come to the Eiffel Tower and they want to take the elevator to the top, but the elevator can only carry him and one animal. Now he has a problem. How can he get himself, the panther, and the two ducks to the top of the Eiffel Tower safely?

Questions 13 and 14 are more open-ended questions that potentially can have more than one correct answer (unlike questions 1 – 12). Use reason and logic to come up an answer to them.

13. Mr. Marcoux is passionate about rational drivers. Most choices he makes are deliberate and calculated, especially when it comes to his decision to park his car. Whenever Mr. Marcoux can, he takes advantage of the P.L.P.T., also known as the parking lot pull through. This is when a driver has the ability to pull into, and through, a parking space to avoid having to back out their car when they leave their destination. If you need a better understanding of the P.L.P.T. please visit this link: http://1000awesomethings.com/2008/12/08/879-the-parking-lot-pull-through/ Below is a diagram that infuriates Mr. Marcoux: it is of a car that had an opportunity to take a P.L.P.T., but didn’t.

As you can see, there are no other cars in this 6-space parking lot; you can also assume that there are no barriers or obstacles between the spaces that would prohibit a proper P.L.P.T. from taking place. Additionally, you can assume that this driver would rather drive forward out of a parking spot and despises backing up and also that it’s legal to maneuver the P.L.P.T. Help Mr. Marcoux temper his rage and give him two rational reasons why this person might have chose to park the way that they did.

14. Why are manhole covers round (as opposed to being angular)?

At the beginning of each year, I typically tell students that economics is roughly 50% common sense, 30% thought, and 20% memorization. These next problem sets are more closely related to the scenarios and concepts you will experience throughout the course. They really test your common sense and ability to think (like questions 1 – 14) but more so in an economic way. If you’re thinking that some of your answers “can’t be that obvious” – you’re wrong… they can be. For any question that says to explain, please keep your explanations brief, clear, simple and no more than two sentences.

15. Paul plays procession pleasantly in the pit of a popular pop orchestra. Paul’s job pays him a salary of $50,000. With his earnings, Paul purchases a plethora of products at his local market place. Presently, Paul is perplexed and ponders why prices of products have progressively increased. An economist says to Paul, “Inflation, bro” which is street lingo for when prices of goods and services increase within a society. If Paul’s salary does not change, does inflation help Paul or hurt Paul? Explain.

16. Referring to the question above, Paul’s bosses decide to give him a $20,000 raise! Would Paul

feel this was a large enough raise if he calculated the inflation rate to be 50%? Explain.

17. Jill joyously joggs to geometry her junior year. Why is she jogging? Because it’s first period and she’s always late. Regardless, Jill knows that she needs to do well in the course because her junior year matters significantly to colleges. Jill gets an A in geometry and finishes her junior year with a cumulative GPA of 5.0. Yes, 5.0. Jill gets into every college she applies to: Harvard, Yale, Cambridge, Oxford, McGill, etc… Ultimately she chooses to become a Muddog and commits to SCLSU (Southeast Central Louisiana State University). She’s a big football fan and is jazzed that SCLSU won the Bourbon Bowl on the last play of the game against their archrival, the University of Louisiana. Jill can’t afford to pay the cost of college on her own (or with her parent’s money) and decides to take out student loans to pay for her entire cost of college. Her cost of attending SCLSU will total $300,000 for four years. A bank agrees to give her a $300,000 loan and will ask her to pay 10% interest on that loan.

a. Once Jill repays the loan, how much will Jill pay back the bank in interest?

b. Once Jill repays the loan, how much will Jill have to pay back the bank in total?

18. Refer back to the scenario in question 17. Jill is considering attending graduate school upon receiving her bachelors degree and again, she would have to take out loans to pay for a masters degree. If the bank asked her to pay 90% interest on her graduate loans, would this incentivize or disincentivize Jill getting a masters degree? Explain.

19. Use questions 17 and 18 to help you fill in the blanks. High interest rates

(encourage/discourage) ______________________ consumption and borrowing, low interest

rates (encourage/discourage) ______________________ consumption and borrowing.

20. Use questions 17 and 18 to help you answer this question. Who prefers high interest rates in

society? Explain.

21. Fred Fryers, from Fredericksburg, ferociously fights fires from four to five on Fridays in frigid, freezing February frost. For his services, Fred gets paid $10,000 from his local municipality, unfortunately, they tax his earnings at an 80% rate. If Fred decided to spend all of his after tax earnings (also known as disposable income), how much could he spend?

22. Refer back to question 21. If Fred’s local government decided not to tax any firefighter’s income, would he likely spend more or less? Explain.

23. What makes our economy “tick” (AKA what helps our GDP)1 can be boiled down to four main components: 1) how much spending people do on goods and services – in economics, this is known as consumption. 2) How much businesses spend on things like factories and equipment – in economics, this is known as investment.2 3) How much the government spends on goods and services, like military spending, healthcare spending, education spending, etc… In economics, this is known as, shockingly, government spending.3 4) The difference

1 What makes our economy tick, more technically speaking, is measured by something called Gross Domestic Product (GDP). We’ll learn more about this in greater detail, but for purposes of simplicity, the four things presented in this question added together compose our GDP. An increase in any one of the four factors improves our GDP, and therefore makes our economy stronger. 2 Side note, this one always confuses students. Anytime the word investment is used in the real world, it’s usually referring to stocks, mutual funds, etc… but not in economics. In economics, investment means when businesses spend money. Another side note, most of the time the word “capital” is used to refer to cash / money in the real world. Again, in economics “capital” means something different – it refers to new machines and new factories that business use. So in economics, investment is when businesses buy capital. 3 Side note, things like welfare, unemployment compensation, social security, etc… doesn’t count as government spending because these programs just transfer money from the government to a person. These transactions are known as “net transfers” in economics. Net transfers are not taken into consideration when factoring GDP.

between how much a country exports and imports – in economics, this is known as net exports.4 Refer back to question 22 – how would this tax change this impact GDP? Explain.

24. Refer back to the four components of GDP from question 23 when answering this question. According to the Word Bank, the USA had the largest GDP in the world at $19.4 trillion in 2017. If the government of Chad were to borrow $20 trillion from China to build the world’s largest filing cabinet, would it have had the world’s largest GDP in 2017? Explain. (Assume that Chad’s net exports are $0.)

25. Refer back to question 24. Assume Chad had a national debt of $1 trillion dollars. Would its budget deficit increase, decrease, or remain the same if it borrowed from China? (Google terms that are unfamiliar if you’re not sure of this answer.)

26. Bitcoin was created in 2009 as an alternative form to traditional currency. Bitcoin is entirely digital, is not affiliated with any country, and functions like cash does. Many saw the introduction of Bitcoin as insignificant, a fad, confusing, and a weird, niche currency that would not have any economic significance. Because of that, nobody really wanted Bitcoin. In fact, in March of 2010, a person could exchange $1 for 3,000 Bitcoin – it was essentially valueless. As people began to recover from the 2008/2009 recession, and as they realized that standard currency issued by governments (the dollar, the Euro, the pound, etc…) were in fact volatile, imperfect, and somewhat risky, the appeal of owning Bitcoin became more attractive. During this time, some businesses even accepted Bitcoin as a legitimate form of payment, bolstering its credibility. As more people jumped on the Bitcoin bandwagon, its value climbed; in December of 2017, a person could exchange 1 Bitcoin for $19,650. In other words, if a person invested $1 into Bitcoin in March of 2010, they could have sold that investment for 58.9 million dollars less than 8 years later. From 2010 to 2017, did the value of the dollar appreciate, depreciate, or remain the same compared to Bitcoin?

27. Use the scenario in question 26 to help guide you through this question. Americans use dollars to buy things in the United States; Brits use pounds to purchase things in Great Britain. If swaths of Americans begin to vacation in London, what do you think would happen to the value of the pound? Explain.

4 Side note, in America, this number is negative. We import far more than we export, so our net exports are negative. In China, it accounts for a significant part of their GDP. If net exports are negative for a country, its’ commonly referred to as a “trade deficit”.

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