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Economics Homework Three - Model (view source)
Revision as of 21:03, September 25, 2009
, 21:03, September 25, 2009building model answers
1. Give an example of a good that has a large price elasticity, meaning that a small decrease in price causes a big increase in demand.
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2. Explain the concept of income elasticity.
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3. A nearly perfectly elastic demand curve is nearly ________ in shape; a nearly perfectly inelastic demand curve is nearly __________ in shape.
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4. '''''Why''''' is the name "necessity" given to a good that has a price elasticity of less than one, and the name "luxury" given to a good that has a price elasticity of more than one?
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5. What is a substitute for french fries, and what is a complement for them?
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6. Give an example of a "normal" good, and an example of an "inferior" good.
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7. A "price ceiling" is a type of price control that sets the maximum price allowed by law for something (like a real ceiling). A "price floor" is a type of price control that sets a minimum price allowed by law for something (like a real floor). Does a price ceiling that is set below the equilibrium (free market) price cause a surplus or a shortage? Using the graph in this lecture, explain why a surplus or a shortage is created by a price ceiling.
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===Honors===
Write an essay of about 200-300 words total on one or more of the following topics:
8. Take a straight line demand curve and describe the shape of the total revenue curve as a function of price.
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9. Explain price discrimination, and conclude with your view of whether it should be legal or illegal.
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10. Do you support "free trade" because it creates wealth, or do you oppose it for simply redistributing wealth to foreigners, some hostile to the United States?
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11. What is your view of the minimum wage? Should it be increased?
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12. Describe and discuss how wealth is created in society.
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2. Explain the concept of income elasticity.
:
3. A nearly perfectly elastic demand curve is nearly ________ in shape; a nearly perfectly inelastic demand curve is nearly __________ in shape.
:
4. '''''Why''''' is the name "necessity" given to a good that has a price elasticity of less than one, and the name "luxury" given to a good that has a price elasticity of more than one?
:
5. What is a substitute for french fries, and what is a complement for them?
:
6. Give an example of a "normal" good, and an example of an "inferior" good.
:
7. A "price ceiling" is a type of price control that sets the maximum price allowed by law for something (like a real ceiling). A "price floor" is a type of price control that sets a minimum price allowed by law for something (like a real floor). Does a price ceiling that is set below the equilibrium (free market) price cause a surplus or a shortage? Using the graph in this lecture, explain why a surplus or a shortage is created by a price ceiling.
:
===Honors===
Write an essay of about 200-300 words total on one or more of the following topics:
8. Take a straight line demand curve and describe the shape of the total revenue curve as a function of price.
:
9. Explain price discrimination, and conclude with your view of whether it should be legal or illegal.
:
10. Do you support "free trade" because it creates wealth, or do you oppose it for simply redistributing wealth to foreigners, some hostile to the United States?
:
11. What is your view of the minimum wage? Should it be increased?
:
12. Describe and discuss how wealth is created in society.
: