tut 8 - Tut 8 (hand in question 1) 1. Our lazy economist...

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Tut 8 (hand in question 1) 1. Our lazy economist goes by the name of Mr. Sloth, and his life is simple - he simply chooses between leisure and work (Mrs. Sloth does all the housework), and enjoys 8 hours of sleep every day, irrespective of the day's activities. Our lazy economist's boss needs him to work more than the compulsory number of hours. Unfortunately for her, she is unable to compel him to work more hours, in terms of his employment contract. Instead, she has to offers Mr. Sloth higher wages… but this has the perverse outcome of him working even less, as he can afford to consume more leisure. (a) Explain how this situation might arise, and include a graph. (b) Ms. Boss is not an economist, but she'd like to beat Mr. Sloth at his own game, and has solicited your help to make him work more hours. Suggest how she might accomplish this.
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Multiple-Choice Questions from Chapter 11 2. A standardized product is necessary for the perfect competition model to work because a. if the products are not perfect substitutes, then firms can develop customer loyalty to their unique type of product and will be able to charge a bit more than the market would otherwise allow. b. many different sellers could not possibly create variations on one product, so that each one would be somewhat different. c. there is no way that a farmer's corn or a taco vendor's tacos could be made unique to the producer. d. a nonstandardized product leaves the consumer confused and immobilized in the marketplace. 3. Being a price taker in a market means that the seller a. charges each consumer the maximum that she will be able to pay for the product. b. has no choice but to charge the equilibrium price that results from the market supply and demand curves. c.
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This note was uploaded on 05/23/2011 for the course ECON 203 taught by Professor Jules during the Spring '11 term at University of Cape Town.

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tut 8 - Tut 8 (hand in question 1) 1. Our lazy economist...

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