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→Lecture Six Assignment
4. Suppose you hire an employee who just took this course, and he says you should invest everything you have in a new facility to reap long-run efficiencies. Why might you say “no”?
4. Suppose you hire an employee who just took this course, and he says you should invest everything you have in a new facility to reap long-run efficiencies. Why might you say “no”?
'''The "long run" <need more>'''
'''This suggestion is risky. We need to know more about the market demand. We need to know whether we have increasing, constant, or decreasing returns to scale. We need to know if Wal-Mart is going to move into our market! As in real life, the best answer is this: we need more information before deciding.'''
5. In an online encyclopedia such as Wikipedia or Conservapedia, would you say that the marginal product of adding another contributor (editor) increases or decreases? What does that imply about the growth path of the project?
5. In an online encyclopedia such as Wikipedia or Conservapedia, would you say that the marginal product of adding another contributor (editor) increases or decreases? What does that imply about the growth path of the project?
'''The instructor's view is that marginal product increases with each additional editor, because they can cross-link to each other's articles, discuss ideas with each other, and enjoy the cite more. On Wikipedia, about 410,000 articles were created in the first 5 years, but in the last two years 1.3 million articles have been created. We don't know how many editors they have had but I would guess that marginal product of an additional editor is greater the bigger the project is.'''
6. Is obtaining a medical, legal, accounting or other type of license to practice in a profession a short-run or long-run cost? Should the State require licenses for professions?
6. Is obtaining a medical, legal, accounting or other type of license to practice in a profession a short-run or long-run cost? Should the State require licenses for professions?
'''This is a long run cost. Most students said that state licensing is good. The instructor is skeptical: why not let the invisible hand handle this?'''
7. Suppose your classmate’s company grew and grew, until it had 1 million employees. But then the economy had a downturn, and you faced bankruptcy. You were in the legislature and your classmate begged you to sponsor legislation to give his company a special zero-interest government loan to make it through the tough times. Should you?
7. Suppose your classmate’s company grew and grew, until it had 1 million employees. But then the economy had a downturn, and you faced bankruptcy. You were in the legislature and your classmate begged you to sponsor legislation to give his company a special zero-interest government loan to make it through the tough times. Should you?
'''This was a debate topic in class, with one side arguing that if the business was valuable then private money would save it, and if not then it is a mistake to give it taxpayer's money. The other side argued that it was beneficial to the economy to save the jobs. The panel ruled against the government giving the company assistance.'''
Honors:
Honors: