Homework 1 - Homework 1 Due date for this homework can be...

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1 Homework 1 Due date for this homework can be found on Blackboard. You can either type or hand-write your homework. Homework must be stapled and submitted in class as a hard copy. No e-mailed homework accepted. 1. [Chapter 1] 2. [Chapter 1]
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2 3. [Chapter 2] (One graph per case needed for a total of 8 graphs. In each graph, there is only one shift: either demand shifts or supply shifts, but not both at the same time) 4. [Chapter 2] 5. [Chapter 3]
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3 6. [Chapter 3] 7. [Newspaper Articles] Read the following two articles. In the first paragraph, summarize the articles in 6 to 9 sentences. In the second paragraph, write your opinion for both articles in 6 to 9 sentences using the economics concepts that we learnt. It doesn’t matter if you agree or disagree with the article, but explain why. For some articles, there is nothing to agree or disagree with. If that’s the case, then write down what you found interesting or the new facts that you learnt, in your second paragraph. The links to the articles are: Can safety regulations kill you? How safe are seatbelts and seatbelt laws? By Navin Kumar Seatbelts save lives, right? They secure people to the vehicle so that if an accident occurs, passengers are prevented from being thrown around and hitting interiors of the car and breaking their necks. They prevent passengers from crashing into each other or being thrown out of the car. Given their ability to prevent second impact , their life saving ability should be obvious. Right? Not really. One of the fundamental principles of economics is “People respond to incentives”. When the ‘cost’ (in terms of injury) of driving rashly is high – such as when the streets are narrow and full of potholes – people respond by driving slowly. Conversely, when the cost is lower – such as when you’re driving along a deserted, straight, smooth, well marked road – you can drive faster with less fear of killing yourself. When a car is equipped with seatbelts, people drive faster since the pain and suffering they would experience if they crashed has been reduced. If this sounds absurd, ask yourself: would you drive with greater care if – one fine day – you woke up and discovered that someone cut away your seatbelts? If the answer is yes, then it means you aren’t driving as safely as you can, right now with your seatbelt on. People face trade-offs. They can spend an hour cleaning up the house or watching TV, but not both. They can have, within the hour, a clean house or the pleasure of having watched Ross get divorced, but not
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4 both. Similarly, they can drive fast and get home from work quickly (risking a car crash) or they can drive slowly and reduce the risk of getting into an accident (but come home late). The speed most people finally choose depends on their tastes, urgency and whether there’s something good on TV or not. If the risk of getting hurt in an accident is reduced, people “consume” some (if not all) of the increased safety by converting it into speed.
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