PAM_2000_Sp_2009_Problem_Set_1 - PAM 2000, Intermediate...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
PAM 2000, Intermediate Microeconomics Problem Set 1 Return to TA by beginning of class Thursday, January 29 th In class some examples were given of novel applications of marginal benefit/marginal cost analysis. These were examples of how something should or could be optimally allocated, but it was not allocation by a market. 1. Provide an example of your own of such non-market allocation, and discuss how marginal benefit/marginal costs analysis would apply to that example. 2. Draw a MB/MC diagram for your example, and explain in words why the MB and MC curves have the shapes they do. What does a point on the line mean? What is the interpretation of the area under the curves? Be sure to label both axes carefully. 3. Explain what the optimal quantity of the activity you identify is, and why that is the optimal quantity. Do you expect that the optimal quantity will be the actual quantity that we observe in the world? Why or why not? I.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 03/03/2009 for the course PAM 2000 taught by Professor Evans,t. during the Spring '07 term at Cornell University (Engineering School).

Page1 / 2

PAM_2000_Sp_2009_Problem_Set_1 - PAM 2000, Intermediate...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online