Economics Model Answers Ten - 2013

1. In your own words, try to give a better definition of "externalities" than provided by this Lecture.

2. Explain what "derived demand" is, and provide an example.

3. What is your favorite question on one of the quizzes that you answered incorrectly, and why is it your favorite?

4. Give an example of a positive externality, and an example of a negative externality. The example does not have to be limited to a business.

5. Explain why private firms in the free market are unlikely to try to provide public goods.

6. Review question: the cross-elasticity of A with respect to B is positive, and C with respect to D is negative. What is the relationship (complement or substitute?) of goods A and B with each other, and C and D with each other? Explain.

7. List the four factors of production and give a very brief explanation of each.

Honors

Answer 3 out of the following 4 questions:

8. Explain why marginal revenue must be zero when total revenue is maximized.

9. Provide, in your own words, the best definition of "public good" that you can.

10. Identify a concept in economics that you found difficult to understand at first, but then explain how you were able to eventually understand it.

11. What is the price elasticity of demand for this demand curve: P=30/Q. Explain.