ec-3 - E201 Fall 2009 HOMEWORK 2 ANSWERS You learned to...

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E201 Fall 2009 HOMEWORK 2 ANSWERS You learned to ride a bicycle by trying it out. You tried getting on, starting, turning, stopping. Each of these was a problem. By solving problems one by one (and crash by crash), you developed the skill. Microeconomics is learned the same way. You can = t rely on memorizing a bunch of definitions and dates; you have to get inside the skill and make it your own--like shooting a basket or knitting a sweater. The acquisition of any skill requires determination and practice. Demonstrate your skill in economic analysis by answering the following questions on a separate sheet of paper. Proudly hand in these answers at your next learning session. 1. An eminent judge and criminologist argues that the rights of those accused of crimes should not be thought of as absolute. Rather, he points out that the more procedural rights are expanded for criminals, the lower the probability of conviction and the higher the crime rate. Can you caste this discussion terms of the PPF? (Remember, you need to show two goods on the axes of the PPF.) You can put “Rights of the Accused” on one axis and “Security” or “Freedom from Fear of Crime” (or something like this) on the other axis. The implication is that more of one necessarily implies less of the other. Most discussion of rights seems to ignore the issue of trade-offs involved, implicitly suggesting that the extension of rights to some individuals (e.g., those charged with crimes) is costless. The PPF reminds us that nothing is free. 2. Consider the farmer and the rancher from the example in Chapter 3. Explain why the farmer = s opportunity cost of producing 1 ounce of meat is 4 ounces of potatoes. Explain why the rancher = s opportunity cost of producing 1 ounce of meat is 2 ounces of potatoes. When the farmer uses his limited time to produce an ounce of meat, he gives up the opportunity to

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This note was uploaded on 04/19/2011 for the course ECON 200 taught by Professor Staff during the Winter '09 term at Indiana.

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ec-3 - E201 Fall 2009 HOMEWORK 2 ANSWERS You learned to...

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