hw01key - BINGHAMTON UNIVERSITY Department of Economics...

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BINGHAMTON UNIVERSITY Department of Economics Principles of Microeconomics (Econ 160B) Homework #1 Answer Key 1. (8 pts.) Would an economist consider clean air a scarce resource? Explain. Yes, because the air has alternative uses. We can choose to use it to either breathe or to undertake activities that pollute it. The more we want to breathe clean air the more we must limit the production of pollutants. The more we pollute the air the less we can breathe clean air. 2. (6 pts.) Is the slope positive or negative in the above figure? Calculate the slope. The slope is negative because the line is downward sloping. The slope is equal to the change in Y (which is equal to -3) divided by the change in X (which is equal to 3). Therefore, the slope is equal to (-3/3) which equals -1. 3. (6 pts.) Suppose that you buy Internet service from Friendly ISP Corporation. You are charged a monthly fee of $3.50 and must also pay an hourly charge of $1.00 for every hour you use the Internet. Draw a diagram of the relationship
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hw01key - BINGHAMTON UNIVERSITY Department of Economics...

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