HW 1 answers - Economics 101-300 Winter, 2008 Homework...

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Economics 101-300 Winter, 2008 Homework Problem Set #1 Problems: 1) Using an understanding of economic method, explain why toilet paper is or is not scarce. Economic scarcity is a question of the availability of a good relative to people’s wants for that good. Anything that has a positive price is considered to be scarce because if there were enough to satisfy everyone’s needs a good would be free. 2) Here is an example of how a topic addressed in the previous question might be presented as a multiple choice problem: Is toilet paper scarce? a) No, because you can buy it at any supermarket. b) Yes, because there’s only a limited supply compared to people’s wants for it. c) No, because toilet paper is plentiful and cheap. d) Yes, because there’s only so much toilet paper in existence. e) It is impossible to determine the answer to this question. 3) Suppose Caitlin has a chance to spend a 3-day weekend in New York with her best friend. To do that, she will have to get 3 days off work as a waitress--her next best alternative—where she makes $100 a day, and she will miss a concert that she thought about going to instead of work. She had already decided against going to the concert, but she already bought the ticket. The price of the concert ticket was $60.
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This note was uploaded on 04/01/2008 for the course ECON 101 taught by Professor Gerson during the Winter '08 term at University of Michigan.

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HW 1 answers - Economics 101-300 Winter, 2008 Homework...

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