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Economics Homework Seven - Model (view source)
Revision as of 02:52, November 1, 2009
, 02:52, November 1, 2009built through student 10
1. Identify the four elements of perfect competition.
1. Identify the four elements of perfect competition.
:1. Many buyers and sellers.
:2. Goods that are perfect substitutes for each other.
:3. Perfect knowledge in the market.
:4. Perfect mobility of resources. (Anna)
:The four elements of perfect competition are lots of competitors, lots of things to compete over (perfect substitutes), knowing what all is going on, and everyone has to have the same opportunities. (Seth)
2. Describe how you might use competition, perhaps even competing with yourself, to motivate you to achieve more.
2. Describe how you might use competition, perhaps even competing with yourself, to motivate you to achieve more.
:I believe that it is the will to win that motivates us. You cannot win without motivation so with competition people tend to do their best. (Aran)
3. We are going to have our midterm in two weeks. Think of a question that you would like to see answered or clarified at the next class.
3. We are going to have our midterm in two weeks. Think of a question that you would like to see answered or clarified at the next class.
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4. Do you think the converse of Gresham's Law is true with respect to speech and conversation, such that good speech or conversation (such as discussing the Bible) drives out bad? Explain.
4. Do you think the converse of Gresham's Law is true with respect to speech and conversation, such that good speech or conversation (such as discussing the Bible) drives out bad? Explain.
:Absolutely! I know from personal experience this is completely true. A particular group of friends that I hang out with had "bad speech", and the more I hung out with them over the months, being with them yet not talking bad like them, they definitely realized that I didn't talk like that, and I have seen them over the months totally eliminate bad words from their vocabulary when around me. I didn't have to say anything to them, because just like the converse of Gresham's Law states, the good of my own conversation drove out the bad in theirs! (Deborah)
5. Explain the difference between total cost, average cost, and marginal cost.
5. Explain the difference between total cost, average cost, and marginal cost.
:Total cost is the entire costs your firm sustained from the time you started, including the building of factories, purchase of machines, advertising, wages, production, and many others. Average cost is the total cost divided by number of goods produced (TC/Q). Marginal cost is the amount to produce one more unit. (Duncan)
:Total Cost refers to the sum of both Fixed Costs and Variable Costs. The Average cost is the total cost, divided by the output. Marginal cost is the additional cost of good when the quantity is increased. (Zachary)
6. Suppose you decide you could profitably set the price for a homeschool dance at $15 per ticket, and it would have attracted 150 people. You also determine that 50 out of the 150 people who would have attended would have paid $20 per ticket and 10 out of the 150 would have paid $25 per ticket, and 5 out of the 150 would have paid $30 per ticket, because they would have enjoyed and benefited so much from it. However, the homeschool dance was never held because no one "got around to it." What is the loss in wealth or consumer surplus due to the fact that the event was not held?
6. Suppose you decide you could profitably set the price for a homeschool dance at $15 per ticket, and it would have attracted 150 people. You also determine that 50 out of the 150 people who would have attended would have paid $20 per ticket and 10 out of the 150 would have paid $25 per ticket, and 5 out of the 150 would have paid $30 per ticket, because they would have enjoyed and benefited so much from it. However, the homeschool dance was never held because no one "got around to it." What is the loss in wealth or consumer surplus due to the fact that the event was not held?
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7. Is there perfect competition between homeschooling and public schools? If not, explain the imperfections.
7. Is there perfect competition between homeschooling and public schools? If not, explain the imperfections.
:There is not perfect competition: a) there are many buyers, but few sellers; b) they are not perfect substitutes- homeschooling has 1 on 1 teaching and public schools do not; c) there is not perfect knowledge- the buyers (parents) do not know what homeschooling is usually like; d) there are not identical costs. (Mark)
:No, there is not a perfect competition between public school and homeschool. First, a public school teacher teaches 20 plus kids with 1 teacher and maybe a helper. They are told what to teach, the Bible cannot be taught, and they have removed God from the classroom. The Homeschool teacher has only a few children and can provide one on one teaching with each child individually. They decide what is important to teach, they can teach the Bible, and they can incorporate God into all the lessons. (Shanna)
8. Define the term "competition" in a new way by using another powerful term developed in this course.
8. Define the term "competition" in a new way by using another powerful term developed in this course.
:Competition is a means of reaching greater efficiency among participants in the free market. (Addison)
9. Suppose the underlying labor market is perfectly competitive, but there is a minimum wage above the market rate. Then suppose that the supply of labor increases. Explain what the result is and why.
9. Suppose the underlying labor market is perfectly competitive, but there is a minimum wage above the market rate. Then suppose that the supply of labor increases. Explain what the result is and why.
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10. What is the firm's profit or loss when Q=0 in the honors discussion above? (Answer simply in terms of another cost measure.) Is the firm profitable?
10. What is the firm's profit or loss when Q=0 in the honors discussion above? (Answer simply in terms of another cost measure.) Is the firm profitable?
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11. (Challenging, with extra credit) Prove mathematically that MC>MR for all Q>0 in the honors discussion above. (Hint: define MC in terms of the change in AVC, and then regroup the terms and draw conclusions about them to show MC>MR).
11. (Challenging, with extra credit) Prove mathematically that MC>MR for all Q>0 in the honors discussion above. (Hint: define MC in terms of the change in AVC, and then regroup the terms and draw conclusions about them to show MC>MR).
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