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ARE 201 Lab 2 - Lab#2 Agricultural and Resource...

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Lab #2 Agricultural and Resource Economics (ARE 201) This lab assignment is worth 100 points. You are to complete this assignment and have it to me by the due date specified in the weekly assignment. Late lab assignments will not be accepted without prior arrangement with me. Please let me know if you need any help with this assignment. Good Luck! Purpose of Lab: This lab will review some of the basic economic concepts covered in lecture. The lab will teach you how to calculate and interpret the unemployment rate, polish your ability at using the economic method in addressing problems or issues, teach you how to determine the purchasing power of a dollar, and show you how to compare the cost-of-living among states. Assignments: Review of Basic Economic Concepts from Lecture: Answer the questions below. You may refer to your textbooks and lecture notes. For the multiple-choice questions, provide a brief explanation of your answer. 1. The following topic is an example of microeconomic research : a) Is there a tradeoff between unemployment and inflation? b) What is the effect of interest rates on consumer purchases? c) What is the profit maximizing level of output for a manufacturer? d) Does the federal deficit drive up interest rates? e) None of the above. 2. The following statement is an example of positive economics : a) The procedure under analysis is expected to cost $15,679 with a probability of 95 percent. b) The President's budget is not in the best interest of the country. c) The appropriate action that you "ought to" take for your business is to drop prices10%. d) The Dow Jones is reaching its upper limit given the recent increase in the prime rate. e) None of the above.
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2 3 A smoker and a nonsmoker share a small office. The nonsmoker is irritated by cigarette smoke. Is this situation a positive externality or a negative externality ? a) Positive externality b) Negative externality 4 Mrs. Smith has the most attractive yard in the neighborhood. Her yard is always mowed and landscaped with flowers. Her neighbors' yards are "average" doing only the minimum to satisfy the requirements of the homeowners association. From Ms. Smith’s neighbor’s perspective, does this situation MOST LIKELY set up the possibility of a positive externality or a negative externality ? a) Positive externality b) Negative externality 5 The following is an example of government policy that addresses a positive externality : a) Requiring the use of seat belts while driving or riding in a motor vehicle. b) Regulation on exhaust emissions from automobiles. c) Luxury taxes charged on certain commodities such as furs, cars, and boats. d) Financial aid to college students.
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