ECON 101 Economics Worksheet


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Question 1 [response limit: 1 page]
Consider the following news from February 15, 2022 (attached file news report).
From your reading and considering the distinction between the positive economy and
normative economy, in which of these would you fit the present news? Briefly justify your
Question 2
The company “Pães & Bolos, Lda.” dedicated to the production of breads and cakes. The
following table presents the possible weekly productions, given the production factors and
existing technology:
What do you observe in relation to the behavior of opportunity costs? Explain and
justify what could be the basis of such behavior. Present all the necessary calculations
that support your answer.
At the weekly Board meeting, the weekly production of 130 breads and 15 cakes was
proposed. Justifying your answer, say if you agree with this proposal.
Question 3
In order to attract more consumers and increase its revenues, Porto´s City Theater intends to
reduce prices by 10%. At the same time, the company that manages urban transport in Porto is
planning to increase the price of tickets to reduce its deficit. How can these opposing
measures result in increased revenue for both companies?
Justify properly.
Question 4
In your opinion, does the supply curve of a good reflect the behavior of agents who intend to
sell, taking into account the preferences of those who intend to buy that good?
State effort to combat the effects of the pandemic exceeded the amount that had been
accounted for in 2020 by €1.1 billion, the latest report by UTAO – Technical Unit for Budget
The direct effect of the Covid-19 policy measures on the consolidated general government bill
in 2021 amounted to EUR 5.84 billion, outweighing by EUR 1.1 billion the impact of pandemic
measures that were accounted for in 2020, according to the latest report by the Federal
Assembly’s Utao – Technical Budget Support Unit.
“The total direct impact in 2021 is based on measures that aggravated the overall balance (EUR
5279 million), expenditure on financial assets (EUR 131 million) and measures with extrabudgetary accounting record (net expenditure of EUR 434 million),” explains UTAO.
This direct effect of EUR 5.84 billion, which represents the effort of the Portuguese State to
combat the consequences of the pandemic, complemented by European co-financing totaling
EUR 760.3 million.
But much of this public administration effort was based on funds borrowed by the European
Commission under the SURE mechanism. At the end of 2021 the Portuguese state had in debt
the amount of EUR 5.41 billion contracted through that mechanism.
Of Covid-19’s €5.84 billion of direct impact on public accounts, the largest share was to
support the economy, which absorbed 68.4% of the total amount ing €3.99 billion. The
typology “health” accounted for 31.6%, or 1,845 million euros, explains the UTAO.
According to the same report, “in the area of employment support intervention and the
maintenance of work (EUR 2,133 million) the measures with the greatest weight in the
implementation accumulated throughout the year are those relating to the emergency phase
(extraordinary support for progressive recovery and simplified layoff ), aimed at preserving
“In the last quarter of the year, there was a slowdown in employment support spending and
economic stabilization measures to support employment growth were gained, especially the
Activate program,” utao points out.
The report also shows that in the state intervention to protect household incomes there was
an effort of EUR 698 million.
UTAO also notes that “the extension and exemption measures for payment of tax and
contributory obligations arose at EUR 261 million (4.9%) at the end of December, reducing
their impact on budget implementation over the last quarter of the year (–EUR 380 million
compared to September)”.
State support for its airline company TAP, of EUR 998 million, does not enter these accounts,
which, according to UTAO, “do not constitute a Covid-19 measure”.

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