| Line 198: |
Line 198: |
| | Read and, if necessary, reread the above lecture. Then answer these questions: | | Read and, if necessary, reread the above lecture. Then answer these questions: |
| | | | |
| − | <improve questions:>
| |
| − | <substitute in 3 questions elasticity, especially elasticity re: substitutes and complements>
| |
| | | | |
| − | 1. Your boss asked you to work overtime. Is that a short-run or long-run solution for him? | + | 1. Define, in your own words, economic “efficiency”. Use it in an example sentence. |
| | | | |
| − | 2. Explain briefly economic “efficiency”. Give an example of something that is efficient, and something else that is not. | + | 2. |
| | | | |
| − | 4. Your widget company has the following costs: Producing 10 widgets, your costs are $2000. Producing 8 widgets, your costs are $1800. Producing 6 widgets, your costs are $1500. Producing 4 widgets, your costs are $1200. Producing 2 widgets, your costs are $800. Producing 0 widgets, your costs are $400. What is your fixed cost? What is your MC for widgets 7 & 8? What are your average costs for producing 4 widgets?
| + | 3. Suppose it costs you $500 to make your first 5 units, then $200 to make your next 5 units, and then $100 to make your next 5 units. Costs do not decrease further for you. What is the marginal cost for you to make more units? |
| | | | |
| − | 5. A regulator had to choose new regulation A or B: (A) imposed substantial new transaction costs on consumers, while (B) did not. Which option would the Coase Theorem tend to prefer? Say why.
| + | 4. |
| | | | |
| − | 6. Explain why a businessman fixes his production or supply of goods at the point where his marginal cost equals his marginal revenue.
| + | 5. Coase theorem and regulations. |
| | | | |
| − | 7. Explain the difference between marginal cost and average cost.
| + | 6. What does an owner do when his marginal revenue exceeds his marginal cost? Explain. |
| | + | |
| | + | 7. Coase theorem question. |
| | | | |
| | ===Honors=== | | ===Honors=== |
| | | | |
| − | Write a 300-word essay on one or more of the following:
| + | No essay this week. Instead, complete all of the following challenging problems: |
| − | | |
| − | 9. Write about any aspect of the Coase theorem you like.
| |
| − | | |
| − | 10. "A bird in the hand is worth two in the bush." Explain that thought in economic terms, including a discussion of risk.
| |
| | | | |
| − | <revise questions:>
| + | 9. The greater the number of substitutes for a good, is it more or less price elastic? Explain. |
| − | 10. Democratic politicians complain about the gap between the rich and poor. Would the economy work any better if the gap were smaller? Assume the absence of transaction costs.
| |
| | | | |
| − | 11. The [[Fifth Amendment]] says “nor shall private property be taken for public use, without just compensation.” How does that benefit the economy?
| + | 10. The smaller the proportion of income consumed by the purchase of a good, is it more or less income elastic? Explain. |
| | | | |
| − | 12. “The pen is mightier than the sword.” Assuming that the sword is used mainly to seize property, explain a purely economic justification for that statement.
| + | 11. Would government prefer taxing a good that is price elastic or price inelastic? Explain. |
| | | | |
| | + | 12. Suppose french fries cost $1 and ketchup 10 cents. When the price of ketchup goes up to 20 cents, the quantity demanded for french fries falls by 10%. What is the cross elasticity of french fries with respect to ketchup? Show your work and make any assumptions you feel are necessary. |
| | [[Category:Economics lectures]] | | [[Category:Economics lectures]] |
| | {{DEFAULTSORT: Economics Lecture 05}} | | {{DEFAULTSORT: Economics Lecture 05}} |