Economics 404 Spring 2016 Industrial Organization and Data Science Instructors: Jacob LaRiviere , Affiliate Professor & Senior Researcher, Microsof Emails: [email protected] Course Assignments & Reading Course assignments should be printed (code, output and descriptive answers) and turned in at the start of class unless otherwise noted. Feel free to work in groups but everyone is required to turn in their own work with answers written in your own words. In both calculations and complex ideas, write down each step of logic used in reaching your conclusion. Keep in mind that in most cases a good answer is one precise sentence; quality is heavily favored over quantity. This will be graded on a full credit, half credit and no credit basis. All work must be typed Discussion questions do not need be written out ahead of time. At the beginning of each class the professors will lead a discussion around these questions. Students will be called on, potentially at random, to add their insight. This part of class will contribute heavily to your course participation grade. Week 1, due April 6 Reading: McMillan Ch. 1-3, McAfee Ch. 1-2, ISL Ch. 2.3 Discussion questions. 1)McMillan discussed Dutch flower auctions at the beginning of the book, what is your reaction to this sort of mechanism? How does it differ from “typical” auctions common in movies and TV with an auctioneer calling out a price? Why do you think they use it? 2)McAfee notes that the “law of one price” is a ridiculous “law”. What are some examples in your experience where you see two similar goods in “similar places” having very different prices vs. generally having prices that do not differ by much? 3) McMillan states his intention of the book is to “demystify markets.” What are some aspects of markets that are confusing to you now (e.g. how are prices set on the stock market, why is that high oil prices seem to be bad for the stock market, but low oil prices are bad too?). Please come to class with some questions along these lines. Assignment to be turned in. Industrial Organization and Data Science Exercises Set 1. Due beginning of class, Wednesday, March 6 th . 1) Consider the expression “decreasing marginal utility”. a. Please define the last two terms of the expression individually and explain what the entire phrase means in one sentence.
Economics 404 Spring 2016 Utility is an idea that people get a certain level of satisfaction/happiness from consuming goods and service. And marginal utility refers to the addition made to total utility, we get after consuming one more unit. The additional benefits a person derives from a given increase of his stock of a thing diminishes with every increase in stock that he already has. In other words, as the amount consumed of a commodity increases, the utility derived by the consumer from the additional units, i.e marginal utility goes on decreasing.