Econ200_Homework1 - Econ
200
Homework
1
 


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Unformatted text preview: Econ
200
Homework
1
 
 Chapter
1
problems:
1,
10,
11,
14
 Chapter
2
problems:
5
 
 1).
For
Christmas
your
parents
got
you
a
$50
sweater
you’re
considering
returning.
 
 a).
What’s
the
opportunity
cost
of
keeping
the
$50.
 
 b).
When
you
go
to
the
store,
they
have
a
different
sweater
you
like
better
for
$60.

If
 you
trade
in
the
sweater
you
got
as
a
gift,
how
much
does
the
new
sweater
cost
 you?
 
 c).
To
go
to
the
store
to
return
the
sweater
(forget
the
new
sweater),
you’d
have
to
 take
an
hour
off
of
your
$15/hour
job.
What
is
the
cost
of
keeping
the
sweater?
 
 
 2).
Explain
what
economists
mean
by
“the
law
of
diminishing
marginal
value”
and
why
we
 say
that
“price
equals
marginal
value”?
 
 
 3.)

Cole
has
the
following
marginal
value
schedule
for
new
Gap
jeans.

The
market
price
for
 Gap
jeans
is
$50.
 
 Q
 
 MV
 1
 
 80
 2
 
 75
 3
 
 65
 4
 
 60
 5
 
 57
 6
 
 50
 7
 
 45
 8
 
 35
 9
 
 25
 
 a.) How
many
jeans
will
Cole
purchase,
and
what
is
his
total
expenditure?
 
 b.) What
is
Cole’s
gain
(surplus)
from
this
consumption
of
jeans?
 
 c.) Draw
Cole’s
demand
curve
for
jeans
and
label
his
consumer
surplus,
total
value
and
 total
expenditure
when
the
price
of
jeans
is
$60.
 
 d.) How
much
surplus
would
Cole
lose
if
the
price
of
jeans
increased
from
$50
to
$60?
 
 e.) The
Gap
in
Redmond
sells
its
jeans
for
$45,
as
opposed
to
the
$50
price
in
Seattle.
 How
much
would
Cole
spend
to
get
to
Redmond
to
go
shopping?
 
 
 
 
 4.)
Bill
and
Brian
have
the
following
marginal
value
schedule
for
CDs.

The
market
price
for
 CDs
is
$15.
 
 Bill
 
 
 Brian
 Q
 
 MV


 
 Q
 MV
 1
 
 30
 
 1
 21
 2
 
 27
 
 2
 18
 3
 
 24
 
 3
 15
 4
 
 21
 
 4
 12
 5
 
 18
 
 5
 9
 6
 
 15
 
 6
 6
 7
 
 12
 
 7
 3
 8
 
 9
 
 8
 0
 
 a).
Draw
each
of
their
demand
curves.

Assuming
they
are
the
only
two
consumers
of
 CDs,
draw
the
total
market
demand
for
CDs.

 
 b).
How
many
total
CDs
are
purchased?
 
 c).
Bill
and
Brian
face
the
same
price
of
CDs.

Who
buys
more
CDs?
What
does
this
 mean
about
who
has
the
higher
marginal
value?
Total
value?
 
 
 ...
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