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Line 1: + + − − :Efficiency is the most possible productivity gained from an operation, good, or service with the least amount of time, energy, or money used in transaction costs. An example sentence: It is much more efficient to do the dishes quickly when your mom asks you to than to complain and whine about it. That will simply waste even more time than just doing the dishes and getting it over with. (Trisha) Line 25:
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Economics Homework Five - Model (view source)
Revision as of 21:13, October 21, 2009
, 21:13, October 21, 2009complete
1. Define, in your own words, economic “efficiency”. Use it in an example sentence.
1. Define, in your own words, economic “efficiency”. Use it in an example sentence.
:Efficiency is the most possible productivity gained from an operation, good, or service with the least amount of time, energy, or money used in transaction costs. An example sentence: It is much more efficient to do the dishes quickly when your mom asks you to than to complain and whine about it. ... (Trisha)
:Minimum waste, with maximum output. (Aran)
:Minimum waste, with maximum output. (Aran)
:Efficiency is a term used for describing a way of working where you get the maximum done in the minimum time. (Mark)
:Efficiency is a term used for describing a way of working where you get the maximum done in the minimum time. (Mark)
2. Suppose the cross elasticity of demand for goods A and B is +3.8, and for goods X and Y is -2.7. What can you conclude about the relationship of the goods A and B, and of X and Y?
2. Suppose the cross elasticity of demand for goods A and B is +3.8, and for goods X and Y is -2.7. What can you conclude about the relationship of the goods A and B, and of X and Y?
5. What is the basic assumption of the Coase theorem, and why is that assumption so important to the result of the theorem?
5. What is the basic assumption of the Coase theorem, and why is that assumption so important to the result of the theorem?
:The basic assumption of the Coase theorem is an absence of transaction costs, and their absence enables the free market to attain the optimal use of a resource no matter who owns it. The assumption is essential because if transaction costs exist, then they impede the ability of people to negotiate with each other for the optimal result. (Instructor)
:The basic assumption of the Coase theorem is an absence of transaction costs, and their absence enables the free market to attain the optimal use of a resource no matter who owns it. The assumption is essential because if transaction costs exist, then they impede the ability of people to deal with each other for the optimal result. (Instructor)
:The Coase Theorem is based off of two main ideas, freedom of individual choice and zero transaction costs. The Theorem implies that society would be much better off with lower transaction costs and that efficiency and prosperity can be obtained by reducing or eliminating them all together. (Amanda)
:The Coase Theorem is based off of two main ideas, freedom of individual choice and zero transaction costs. The Theorem implies that society would be much better off with lower transaction costs and that efficiency and prosperity can be obtained by reducing or eliminating them all together. (Amanda)
:Without transaction costs to gum the works, there would always be successful economic results between people, because "if there is a will there is a way" in the free market. It important because it operates without regard to a person’s wealth, race, sex or nationality. (Aran)
:Without transaction costs to gum the works, there would always be successful economic results between people, because "if there is a will there is a way" in the free market. It important because it operates without regard to a person’s wealth, race, sex or nationality. (Aran)
:The basic assumption of the Coase theorem is that in the absence of transaction costs, an efficient or optimal economic result occurs regardless of who owns the property rights, It is extremely important because the result of the theorem is based on whether there is a lot of government control raising transaction costs and making everything less efficient and more expensive for people. (Deborah)
:The basic assumption of the Coase theorem is that in the absence of transaction costs, an efficient or optimal economic result occurs regardless of who owns the property rights. ... (Deborah)
6. What does an owner do when his marginal revenue exceeds his marginal cost? Explain.
6. What does an owner do when his marginal revenue exceeds his marginal cost? Explain.
:.10/.25 = .4 = Y<sub>ed</sub>. Thus the income elasticity for steak is .4.
:.10/.25 = .4 = Y<sub>ed</sub>. Thus the income elasticity for steak is .4.
:-.05/.25 = -.2 = Y<sub>ed</sub>. Thus the income elasticity is -.2 for hamburgers. (Kate)
:-.5/.25 = -.2 = Y<sub>ed</sub>. Thus the income elasticity is -.2 for hamburgers. (Kate)
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 demand for french fries with respect to ketchup? Show your work and state whether these goods are complements or substitutes.
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 demand for french fries with respect to ketchup? Show your work and state whether these goods are complements or substitutes.