ECON 200 Homework 5 - ECON
200
Homework
5


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Unformatted text preview: ECON
200
Homework
5
 Due
Wednesday,
2/4/10
 
 
 1.

Explain
why
the
total
cost
of
producing
a
certain
amount
of
goods
is
lowest
when
 the
marginal
cost
of
all
producers.

Use
a
graph
where
there
are
2
producers
of
a
 good.
 
 2.
Explain
what
we
mean
when
we
say
the
supply
curve
is
upward
sloping
because
 of
‘diminishing
returns
at
the
extensive
margin.’
 
 3.
Most
kids
have
to
do
some
chores
around
the
house.

Let’s
say
the
parents
give
a
 kid
the
job
of
dusting
while
they
do
the
vacuuming.

Assuming
the
parents
can
both
 dust
and
vacuum
faster
than
the
child,
why
does
the
house
get
cleaner
when
they
 give
this
task
to
the
child?
How
does
this
relate
to
why
we
engage
in
international
 trade?
 
 4.
Why
do
rents
exist?
Why
do
we
say
that
when
producers
seek
to
maximize
their
 rents,
it
leads
to
the
most
efficient
use
of
resources?
 
 5.
What
do
you
think
the
sign
of
the
cross
price
elasticity
of
demand
for
headphones
 with
respect
to
iPods?

What
is
the
sign
of
the
cross
price
elasticity
of
Discmans
with
 respect
to
iPods?
Explain.
 
 6.
Name
one
good
for
which
your
income
elasticity
of
demand
is
negative
and
 positive,
and
explain
why.
 
 7.
During
the
Atkins
diet
craze,
many
people
cut
back
dramatically
on
their
bread
 consumption.
What
do
you
think
this
did
to
the
equilibrium
quantity
and
price
of
 wheat
(the
main
ingredient
in
bread)?

Assuming
that
the
land
used
to
grow
wheat
 could
easily
be
used
to
grow
the
grass
fed
to
cows,
and
that
red
meat
got
much
more
 popular
during
the
craze,
what
do
you
think
happened
to
the
equilibrium
price
and
 quantity
of
grasslands
for
feeding
cows?
 
 8.

Because
of
the
baby
boom,
there
are
more
people
in
the
U.S.
between
the
age
of
 40
and
66
than
any
other
age
group.

There
is
concern
about
what
is
going
to
 happen
as
they
all
start
retiring
and
drawing
on
their
social
security.

When
they
 start
retiring,
what
will
be
the
effect
on
the
equilibrium
price
and
quantity
of
senior‐ level
jobs
(i.e.
manager,
principals,
any
position
that
requires
lots
of
experience).


 How
do
you
think
this
will
effect
the
price
and
quantity
of
mid‐level
jobs?
 ...
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This note was uploaded on 02/06/2010 for the course ECONOMICS 200 taught by Professor Stiban,f during the Winter '10 term at University of Warsaw.

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