ExtraCreditQuestions - Econ 251: Maymester Extra Credit...

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Econ 251: Maymester Extra Credit Questions Please consult the new Syllabus about the point values of extra credit for your particular situation. For each question there is a short paragraph and then a question related to that paragraph. When you answer each question, make sure you answer the question completely, most questions have several parts. To answer a question completely you should use the information in the paragraph, from class and observations from your own life. Question 1 Consider the following story. Service at a local post office is incredibly slow in Anytown, USA. On a normal day, 15 or 20 minutes may go by as you wait to mail a package or buy stamps. During the Christmas rush, the typical wait is more than 30 minutes. The post office is located in a small strip mall and a UPS Store has elected to open up directly next door. A coffee shop that had recently occupied the space was one of several stores that went bankrupt in quick succession, illustrating the relatively low opportunity cost of the space. While apparently low in value for alternative uses, such as coffee shops, the space is quite valuable when used by a commercial mailer. George, a citizen of Anytown, got tired of waiting in line at the post office, went next door, and in two minutes mailed his packages. He was willing to spend more money, and less of his valuable time, to accomplish the task of mailing out seasonal gifts. The clerk told him that they had gotten a lot of business from people who saw the long lines at the post office and chose to save time by using UPS’s commercial service. Question: What is a likely common feature among people who leave the long line at the post office and pay extra to use UPS? What are two other examples where a potential business location has a low opportunity cost except in a particular specialized use that is made valuable because of something next door or in the neighborhood? Question 2 East semester, after course grades were sent out, I used to be deluged with phone calls and email from students asking why they got the grade they did (always below what they expected). The answer usually was that they messed up on the final exam. A late colleague suggested a way of reducing this harassment. He pointed out that the students’ opportunity cost is low after exam week and stays low until classes start the next semester. To discourage students from calling and e-ailing, he said that he writes on the exam that no complaints about grades will be acknowledged until the second week of the next semester. At that time, students’ opportunity
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This note was uploaded on 02/06/2012 for the course ECON 251 taught by Professor Blanchard during the Summer '08 term at Purdue University-West Lafayette.

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ExtraCreditQuestions - Econ 251: Maymester Extra Credit...

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