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3 (4) - 3 b Watch a movie instead of studying for an exam 1...

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Unformatted text preview: 3. b. Watch a movie instead of studying for an exam 1:. Ride the bus instead of driving your car Liza needs to buy a textbook for the next economics class. The price at the college bookstore is 565. One online site offers it for $55 and another site, for $57. All prices include sales tax. The accompanying table indicates the typical shipping and handling charges for the textbook ordered online. Shipping Delivery method tlme Charge Standard shipping 3-? days $3.99 Second-day air 2 business days 3.93 Next-day air 1 business day 13.93 a. What is the opportunity cost of buying online instead of at the bookstore? Note that if you buy the book online. you must wait to get it. b. Show the relevant choices for this student. What deter- mines which of these options the student will choose? . Use the concept of opportunity cost to explain the following. a. More people choose to get graduate degrees when the job market is poor. b. More people choose to do their own home repairs when the economy is slow and hourly wages are down. c. There are more parks in suburban than in urban areas. d. Convenience stores. which have higher prices than super- markets. cater to busy people. e. Fewer students enroll in classes that meet before 10:00 AM. . In the following examples, state how you would use the prin- ciple of marginal analysis to make a decision. a. Deciding how many days to wait before doing your laundry b. Deciding how much library research to do before writing your term paper c. Deciding how many bags of chips to eat d. Deciding how many lectures of a class to skip This morning you made the following individual choices: you bought a bagel and coffee at the local café. you drove to school in your car during rush hour. and you typed your roommate's term paper because you are a fast typist—in return for which she will do your laundry for a mond‘i. For each of these actions. describe how your individual choices interacted with fire individual choices made by others. Were other people left better off or worse off by your choices in each case? . The Hatfield family lives on the east side of the Hatatoochie River, and the McCoy family lives on fire west side. Each fam- ily's diet consists of fried chicken and corn-on-the-cob. and each is self-sufficient. raising their own chickens and growing their own corn. Explain the conditions under which each of the following would be true. 10. 11. CHAP‘reei FIRST PRINCIPLES 21 a. The two families are made better off when the Hatfields specialize in raising chickens. the McCoys specialize in growing corn. and the two families trade. IL The two families are made better off when the McCoys specialize in raising chickens. the Hatfields specialize in growing corn. and the two families trade. . Which of the following situations deseribes an equilibrium? Which does not? If the situation does not describe an equilib- rium. what would an equilibrium look like? a. Many people regularly commute from the suburbs to downtown Pleasantville. Due to traffic congestion, the trip takes 30 minutes when you travel by highway but only 15 minutes when you go by side streets. I). At the intersection of Main and Broadway are two gas stations. One station charges $3.00 per gallon for regular gas and the other charges $2.85 per gallon. Customers can get service immediately at the first station but must wait in a long line at the second. 1:. Every student enrolled in Economics 101 must also attend a weekly tutorial. This year there are two sections offered: section A and section B. which meet at the same time in adjoining classrooms and are taught by equally competent instructors. Secfion A is overcrowded, with people sitfing on the floor and often unable to see the chalkboard. Secfion B has many empty seats. . in each of the following cases. explain whether you think the situation is efficient or not. If it is not efficient. why not? What actions would make the situation efficient? a. Electricity is included in the rent at your dorm. Some residents in your dorm leave lights, computers, and appliances on when they are not in their rooms. b. Although they cost the same amount to prepare. the cafete- ria in your dorm consistently provides too many dishes that diners don't like. such as tofu casserole. and too few dishes that diners do like, such as roast turkey with dressing. c. The enrollment for a particular course exceeds the spaces available. Some students who need to take this course to complete their major are unable to get a space even though others who are taking it as an elective do get a space. Discuss the efficiency and equity implications of each of the following policies. How would you go about balancing the concerns of equity and efficiency in these areas? a. The government pays the full tuition for every college student to study whatever subject he or she wishes. I). When people lose their jobs. the government provides unemployment benefits until they find new ones. Governments often adopt certain policies in order to promote desired behavior among their citizens. For each of the following policies, determine what die incenfive is and what behavior the government wishes to promote. in each case. why do you think that the government might wish to change people's behavior, rather than allow their actions to be solely determined by indi- vidual choice? a. A tax of $5 per pack is imposed on cigarettes. ...
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