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| | ==Assignment== | | ==Assignment== |
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| − | Please read and, if necessary, reread the above lecture. Then complete 5 out of the following 7 questions (leave TWO blank): | + | Please read and, if necessary, reread the above lecture. Then complete 6 out of the following 7 questions (leave TWO blank): |
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| | 1. Which is true about the average fixed costs (AFC) of a firm? | | 1. Which is true about the average fixed costs (AFC) of a firm? |
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| | Choose one of the above and explain your answer. | | Choose one of the above and explain your answer. |
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| − | 6. You can go on www.orbitz.com and watch the price of airline tickets change from day-to-day. If you pick fixed dates of travel, such as Jan. 15 to fly somewhere and Jan. 18 to return, then you will notice that the closer you get to those dates, the higher the price of the ticket usually is. In other words, the earlier in advance that you can buy a ticket, the cheaper it usually is. Explain how this illustrates a basic difference between long run and short run costs. | + | 6. If you were to loan someone money, why would you want him to pay you something extra (interest) when he pays back the loan? Give at least one reason. |
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| − | 7. Pick any aspect of monopolistic competition (other than problem 5 if you answered that) and explain it. | + | 7. Suppose I loaned you $1000 today, and interest rates are 5% per year (compounded annually), and you repaid the loan plus interest in 2 years, then what is the total you would pay to satisfy this debt? |
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| − | ===Honors:===
| + | 8. Review: is the cost of the bus for a trip to D.C. a "fixed cost" or a "variable cost"? Explain, assuming for the purpose of this question that one and only one bus can be used (in reality, we may have several buses). |
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| − | Answer question 8, and then 2 out of the following 3 questions:
| + | 9. Which concept in Economics do you think is the best self-motivator, which you might use to achieve more? |
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| − | 8. Explain why in long-run equilibrium the price charged in monopolistic competition is greater than marginal cost but equal to average total cost.
| + | 10. Suppose I will pay you $1000 in two years, and the interest rate is 10% per year, compounded annually. How much should you pay me today to receive $1000 in two years? Show your work. |
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| − | 9. Economics is sometimes called the “dismal science” because economists predicted population to grow faster than the food supply, marginal returns to diminish, and profits to vanish. But, in fact, there is an abundance of food and profits have not vanished. Why is economics not so dismal after all?
| + | ===Honors:=== |
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| − | 10. "Protectionism" is a pejorative (negative) word. Can you think of a more positive, flattering word to express the same concept in a supportive way?
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| − | | |
| − | 11. What is "Keynesian economics" and what is your view of it?
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| − | <br><br><br>
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| − | ==Assignment== | |
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| − | Read this lecture and look at some of the problems on the midterm exam. The homework assignment is light this week to give you time to spend reviewing concepts in this course. Then answer the problems below:
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| − | | |
| − | Answer 5 out of 6:
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| − | | |
| − | 1. If you were to loan someone money, why would you want him to pay you something extra (interest) when he pays back the loan? Give at least one reason.
| |
| − | | |
| − | 2. Suppose I loaned you $1000 today, and interest rates are 5% per year (compounded annually), and you repaid the loan plus interest in 2 years, then what is the total you would pay to satisfy this debt?
| |
| − | | |
| − | 3. Review: is the cost of the bus for a trip to D.C. a "fixed cost" or a "variable cost"? Explain, assuming for the purpose of this question that one and only one bus can be used (in reality, we may have several buses).
| |
| − | | |
| − | 4. Which concept in Economics do you think is the best self-motivator, which you might use to achieve more?
| |
| − | | |
| − | 5. Suppose I will pay you $1000 in two years, and the interest rate is 10% per year, compounded annually. How much should you pay me today to receive $1000 in two years? Show your work.
| |
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| − | 6. Pick another question from the midterm exam that you answered incorrectly, and explain the correct answer.
| + | Answer question 8, and then 2 out of the following 5 questions: |
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| − | ===Honors===
| + | 11. Explain why in long-run equilibrium the price charged in monopolistic competition is greater than marginal cost but equal to average total cost. |
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| − | Answer 3 out of 4:
| + | 12. Economics is sometimes called the “dismal science” because economists predicted population to grow faster than the food supply, marginal returns to diminish, and profits to vanish. But, in fact, there is an abundance of food and profits have not vanished. Why is economics not so dismal after all? |
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| − | 7. Explain what “economic rent” is in your own words, using your own example.
| + | 13. "Protectionism" is a pejorative (negative) word. Can you think of a more positive, flattering word to express the same concept in a supportive way? |
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| − | 8. An agreement by different firms with each other to reduce output is illegal. Why should that be illegal?
| + | 14. What is "Keynesian economics" and what is your view of it? |
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| − | 9. What is your favorite concept in Economics, and why?
| + | 15. An agreement by different firms with each other to reduce output is illegal. Why should that be illegal? |
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| − | 10. Nash equilibrium, revisited: What is the Nash equilibrium for two gas stations (an oligopoly) that are situation immediately across the street from each other? In other words, what price do they sell at, expressed in terms of one of their cost measures? Explain the process that reaches that "equilibrium".
| + | 16. Nash equilibrium, revisited: What is the Nash equilibrium for two gas stations (an oligopoly) that are situation immediately across the street from each other? In other words, what price do they sell at, expressed in terms of one of their cost measures? Explain the process that reaches that "equilibrium". |
| | <br><br><br> | | <br><br><br> |
| | [[Category:Economics lectures]] | | [[Category:Economics lectures]] |
| | {{DEFAULTSORT: Economics Lecture 12}} | | {{DEFAULTSORT: Economics Lecture 12}} |