Economics Homework Ten Answers - Student Sixteen
1. In your own words, try to give a better definition of "externalities" than provided by this Lecture.
Externalities are costs or benefits that are not only applied towards the buyer and seller, but also towards those outside of the transaction.
2. Explain why marginal revenue must be zero when total revenue is maximized.
When the total revenue is at its highest it is not possible to increase it. Therefore marginal revenue must remain at zero.
3. What is your favorite question on the midterm exam that you answered incorrectly, and why is it your favorite?
Question 30 regarding cross-elasticity is the one I find most interesting. Cross-elasticity is a very difficult concept, yet it is an extremely important concept to know in Economics.
4. Give an example of a positive externality, and an example of a negative externality. The example does not have to be limited to a business.
One example could be living next to a high school which is planning on building a brand new stadium right next door. The negative side consists of constant noise, trash, and poor parking structure. The positive side of having the stadium next door is that when one would like to see a game, they can walk right over which takes transaction costs out of the mix. The public also has full access to the stadiums track, and field.
- Excellent! Could use as a model.
5. Explain why private firms in the free market are unlikely to try to provide public goods.
If private firms provide public good demand will decrease and the firm will lose money.
- OK, but why? Explanation is a tad incomplete. (Minus 1).
7. List the four factors of production and give a very brief explanation of each.
1. Land. (To build the firm on) 2. Capital. (Money) 3. Labor. (Employees) 4. Entrepreneurship. (Advertisement)
- 59/60. Well done! Have a good and blessed Thanksgiving with your family today!--Andy Schlafly 10:44, 26 November 2009 (EST)