ECON 200 Homework 3 - ECON
200
Homework
3
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ECON 200 Homework 3 Due Thursday, 1/25/10 1. As part of the housing the crisis, the government gave all first time buyers an $8000 tax credit, effectively reducing the cost of all homes to new buyers by $8000 (unless the house cost under $8000, as in places like Detroit). Do you think this encouraged first time homebuyers to buy larger, more expensive houses or smaller, less expensive houses? 2. If you order wine at a restaurant, there is always a mark‐up on these wines so that they are considerably more expensive than if you bought them at the store. Why is it hard to find cheap wines on restaurants wine lists? Make up some prices to support your argument. 3. John and Charlie have the following marginal value schedules for t‐shirts. They both currently have 4 t‐shirts. a. Will they each keep their 4 t‐shirts, or will they trade with each other? b. If you say they will trade, why do they trade? When will they stop trading?
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