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Various economic concepts through real-world problems, including decreases in food prices and increases in caloric intake, consumer choice and recycling, ticket scalping, costs of production, consumer surplus, marginalism, production theory, and airline practices. Students will gain a deeper understanding of these topics through graphs and specific examples.
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I. Demand and Supply Using only demand and supply concepts (graphs too) explain the reality of decreases in food prices and an increase in caloric intake (people getting fatter). Be specific! II. Consumer Choice – Trash Pricing and Recycling Much has been written in the press regarding the need to minimize personal disposal of solid waste. Yet most cities till charge a flat fee for garbage collection. Could you propose a different pricing strategy that might lower the amount of solid waste per household? Use a graph also. What unintended consequences might result from your pricing strategy? III. Exchange, Efficiency, and Prices - Ticket Scalpers: Saints or Sinners Team owners and politicians make much of the evil done by scalpers. Please give two economic reasons in support of ticket scalpers. IV Costs of Production Explain how the “Law of Diminishing Returns” could be applied to dealing with Global Warming. V. Consumer Surplus - Benefits from Improvements in Health a. From 1970 to 2000 according to Profs. Murphy and Tapel medical expenditures grew by $34 trillion. b. Benefits from these expenditures in the form of greater longevity amounted to $ billion (50% of that came from a reduction in heart attacks) c. The net of expenditure and benefit is $61 billion. Further, a 1% decline in mortality from cancer or heart disease resulted in an $500 billion value to Americans. Translate all of these facts into an explanation of consumer surplus and use graphs if you can. VI. Marginalism Let’s say you are walking late at night in a big downtown area of an American city. A mugger accosts you and asks for all of your money ( say you have $200.00). Having just studied the microeconomic concept of “marginalism” you decide to apply it to the mugger. You reply “How about I give you $150.00 and you just rough me up a bit.”
You could also offer other “marginal choices” to him. Is this a correct application of marginalism? VII. Production It is known that to stay awake studying or working on a job related project drinking coffee may help you stay awake. Using only production theory, discuss how many cups of coffee you should drink VIII What is the economic basis in theory of the airline practice of “yield management?” How would you explain online sales of airline tickets by say “Priceline.com?” Would you expect the airlines to compete with online ticket sellers? I X. Assume you have two newly elected politicians who both have made campaign promises to end political “pork” or excessive spending. Using game theory show how in fact we would expect to get just the opposite outcome. Hint: think in terms of Prisoners Dilemma. X. Explain why movies come out in the video and retail stores before they are available on Pay for View TV?