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Line 177: − Redo these questions:+ − 6. Suppose you manage a golf course for profit. You poll your customers and find that, each month, they value their first game at $30, their second game at $20, their third at $10, fourth at $0, and refuse to play any more in the same month. It is impractical to charge based on whether someone has previously played a round this month. How do you best charge your customers?+ − 7. Bad British economic policies and a fungus wiped out the basic food supply of potatoes in Ireland between 1846 and 1849, killing 500,000 and sending many Irish to the United States. Do you think potatoes might have been an “inferior” good then? What would you expect the income effect of the shortage of potatoes to have been? + − ===Honors===+ − − Redo these questions: − + − +
→Assignment: better
5. Explain why the shape of an indifference curve for two goods that are perfect substitutes is a straight line going from the upper left down to the lower right. Extra credit: why must its slope be negative 1?
5. Explain why the shape of an indifference curve for two goods that are perfect substitutes is a straight line going from the upper left down to the lower right. Extra credit: why must its slope be negative 1?
6. Describe either the "income effect" or the "substitution effect." Take your pick.
7. Describe the "Law of Demand" and explain in your own words why you think it is usually true.
===Honors===
Write in about 300 of your own words on one or more of the following topics:
8. Describe someone in history who overcame personal hardship and adversity to become very productive.
8. Describe someone in history who overcame personal hardship and adversity to become very productive.
9. "A penny saved is a penny earned!" In fact, once taxation is taken into account, "a penny saved is almost two pennies earned!" Discuss one or both of these quotations.
9. "A penny saved is a penny earned!" In fact, once taxation is taken into account, "a penny saved is almost two pennies earned!" Discuss one or both of these quotations.
10. Do you think a Giffen good really exists? Can you see any possible political bias in the claim that Giffen goods exist? Your views, please.
10. Do you think a Giffen good really exists? Can you see any possible political bias in the claim that Giffen goods exist? Your views, please.
11. Suppose you are a rational consumer who makes purchases by maximizing marginal utility. One day you hear that the price on a good you purchase (e.g., milk), falls by 30%. The Law of Demand says you should buy more of it. Using only the assumption that you maximize marginal utility, prove the Law of Demand as best you can.
11. Prove the Law of Demand as simply as you can, perhaps using the assumption that the consumer always tries to maximize marginal utility.
12. Suppose a friend of yours announced that when he has a choice between a cheaper good made in China and a more expensive good made here, he will buy the latter based on his opposition to communism. Is he being irrational?
12. Discuss the Irish Potato Famine between 1846 and 1849, and whether you think potatoes were an "inferior good" then.
[[Category:Economics lectures]]
[[Category:Economics lectures]]
{{DEFAULTSORT: Economics Lecture 04}}
{{DEFAULTSORT: Economics Lecture 04}}