Economics Homework Ten Answers - Student Two
1.Externalities are any good or service that you can benefit from or not benefit from without paying for it.
- Superb definition.
2.Marginal revenue is zero because it cannot be positive or negative. Because revenue is at its maximum so you can't increase it any, so marginal revenue can't be positive. Same for negative. If it was negative it would reduce the output by one unit and have the affect of increasing the total revenue. That isn't possible because total revenue is at its maximum so then marginal revenue must be zero.
- Excellent! Note: "effect" is the noun, not "affect".
3.Question 6 – Goods and services are used most often to define which of the following concepts: The reason this is my favorite one is because I didn't keep to your advice of going with my first impression. I went with my second impression and got it wrong. So in the future, I will go with my first impression.
- Very good indeed!
4.A positive externality is if you like tennis and your house is next to a tennis court, you can enjoy the game without having to pay for it. A negative externality is if you dislike rock music and next door some kids band practices every day, you get the external non benefit of hearing their music.
5.Private firms in the free market are unlikely to try to provide public goods because they would make a lot less money. People don't really pay for public goods they just benefit from them.
6.A and B are substitutes because they have positive cross-elasticity. C and D are complements because they have negative cross-elasticity. If one of the two goods (A & B) price goes up and demand goes down, then its substitutes demand will go up and then its cross-elasticity will be positive because it went up. Whereas complements when good raised its price and demand goes down for it, its complements demand also goes down making its cross-elasticity negative.
9.A public good is a good that is beneficial to everyone whether they personally pay for it or not. For instance the US Army is a public good.
10.A question on the midterm that describes an unusual situation is #16. If a firm's total revenue were somehow maximized, then its marginal revenue must be (a) zero. This scenario is unrealistic because it is very very hard to have maximized total revenue.
11.The correct answer is 600 units because the price ceiling intersects the supply at 200 and intersects demand at 800. So then 800 – 200 = 600. So 600 is the amount of the shortage.
- Perfect homework! Congratulations. 90/90.--Andy Schlafly 17:45, 25 November 2009 (EST)