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| | '''VI. Assignment''' | | '''VI. Assignment''' |
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| − | Read and, if necessary, reread the above lecture. Then answer these questions: | + | Read and, if necessary, reread the above lecture. |
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| − | Introductory: 1. Your boss asked you to work overtime. Is that a short-run or long-run solution for him?
| + | Homework questions: |
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| − | 2. Explain briefly economic “efficiency”. Give an example of something that is efficient, and something else that is not.
| + | Introductory: 1. “Accounting profit” is ________ minus _________. |
| − | Intermediate: 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?
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| − | 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.
| + | 2. Suppose your company spends $10,000 on labor and $30,000 on equipment for an output of 5000 widgets. You increase your labor costs to $15,000 and your equipment costs to $45,000, and your output increases to 8000. Describe your return to scale: increasing, constant, or decreasing? |
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| − | 6. Explain why a businessman fixes his production or supply of goods at the point where his marginal cost equals his marginal revenue.
| + | Intermediate: 3. Suppose the population doubled and the other utilized economic inputs (air, water, capital, etc.) doubled as needed. What would happen to economic output, such as new inventions and food production? In other words, what is the return to scale from increasing population (labor) and other inputs? |
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| − | 7. Explain the difference between marginal cost and average cost.
| + | 4. Suppose you hire an employee who just took this course, and he says you should invest everything you have in a new facility to reap long-run efficiencies. Why might you say “no”? |
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| − | Honors: Write a 300-word essay on one or more of the following:
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| − | 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.
| + | 5. In an online encyclopedia such as Wikipedia or Conservapedia, would you say that the marginal product of adding another contributor (editor) increases or decreases? What does that imply about the growth path of the project? |
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| − | 11. The [[Fifth Amendment]] says “nor shall private property be taken for public use, without just compensation.” How does that benefit the economy?
| + | 6. Is obtaining a medical, legal, accounting or other type of license to practice in a profession a short-run or long-run cost? Should the State require licenses for professions? |
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| | + | 7. Suppose your classmate’s company grew and grew, until it had 1 million employees. But then the economy had a downturn, and you faced bankruptcy. You were in the legislature and your classmate begged you to sponsor legislation to give his company a special zero-interest government loan to make it through the tough times. Should you? |
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| | + | 8. Suppose you invented fertilizer that is costly to make but has an ever-increasing marginal product. Suppose you own an acre of farmland in South Jersey, and now must decide between spending your money on buying more acres to use the fertilizer, or making more fertilizer. Which should you do? Explain. |
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| | + | 9. A company’s stock price often rises when it announces taking a large one-time write-off (or loss) on its accounting books. Using one or more principles learned in this course, can you explain reasons for that effect on the stock price? |
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| | + | 10. The tremendous economic growth of the 1980s and 1990s resulted from the “supply side” economic policies of President Ronald Reagan, which boosted production by cutting taxes and encouraging investment. Why might the supply side be more important than the demand side? |
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| − | 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.
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| | [[Category:Economics]] | | [[Category:Economics]] |